If you're single and never owned a home, then you'll be considered a first time buyer. This goes for couples where both partners have never previously bought a home as well.

If you've inherited property before, then unfortunately, you won't be classed as a first time buyer. Although you'd be buying for the first time, the rules state that you must never have owned a home before, which is different from never having bought one before.

However, there is good news for commercial property owners. If you've owned a shop, or restaurant, but never owned your own home, you'd still be considered a first time buyer.

How much can I borrow as a first time home buyer?

Typically, lenders used to be willing to lend you about five times your household income. But these days lenders are more cautious about how much they lend you, and take your affordability into account.

Some of the criteria banks and providers use to calculate how much you can borrow include:

  • Your income

  • The deposit amount

  • Your regular outgoings

  • The amount of debt you already have

  • Your credit history

Some providers also calculate your affordability using hypothetical scenarios such as interest rates increasing suddenly to twice or thrice the current rate.

To increase your borrowing potential, it's a good idea to start spending sensibly and reduce your outgoings where possible, three to six months before you apply for a mortgage.

Calculate how much you can borrow with our first time buyer mortgage calculator.

What type of first time buyer mortgage should I choose?

If you're buying a home, you can get two kinds of mortgages:

  1. A fixed rate mortgage, or

  2. A variable mortgage.

The decision depends on how much financial security you need. First time buyer mortgage rates are affected by which type of mortgage you choose.

Learn more about getting your first mortgage.

With a fixed rate mortgage, the interest rate is guaranteed to stay the same over a set period of time. But the payments might be slightly higher than they would with the best variable mortgage. A first time home buyer might find the security of fixed payments reassuring.

With a variable mortgage, the interest rate can change. The monthly repayments are usually a bit cheaper with a fixed rate mortgage. But if the interest rate changes - often because the Bank of England base rate changes - your repayments can increase. Some first home buyers are willing to take the risk for the sake of lower repayments initially.

The mortgages first time buyers choose varies. The best mortgages for first time buyers depends on their situation and how much financial security they need.

Learn more about fixed and variable rate mortgages.

How much of a deposit do I need as a first time buyer?

When buying a home, the bigger your deposit the better your first time buyer interest rate will be.

These days, you need to have a deposit of at least 5% of the property value to get a mortgage. This will result in a Loan to Value ratio (LTV) of 95%, which is the maximum that almost all lenders will accept.

For example, on a 150,000 property, this would mean a deposit of 7,500. You'd get a mortgage for the remaining 142,500.

LTV is a measure of the percentage of the property price that you will need to borrow to make the purchase. Typically, most banks recommend an LTV of 80%.

You can find 95% mortgages for first home buyers from a wide range of lenders in our comparison tables.

Government schemes to help first time buyers

Many first time buyers struggle to save enough to qualify for a mortgage. This is why government has schemes in place to help people get on the property ladder and buy their first home

Help to Buy

Help to Buy is a first time home buyer government scheme that can help you get a mortgage with a small deposit.

They offer equity loans. That's when they lend you money that you can use towards your deposit, and you repay it later.

Shared ownership

There is another first time home buyer government scheme which offers shared ownership.

That's when you buy a share of your home's value, between 25% and 75% and pay rent on the portion you don't own. This means you can buy a house with a smaller mortgage, and therefore a smaller deposit too.

Lifetime ISA

If you're over 18 but under 40, you can make the most of the Lifetime ISA. This is a first time home buyer government incentive to help you buy your first home and save for your future.

Under the rules you can add 4,000 a year into your Lifetime ISA until you're 50. The government adds a 25% bonus to the money you save, up to a maximum of 1,000 annually.

First time buyer mortgage FAQs

Q

Can I get an interest only mortgage?

A

It is very unlikely that you will be offered an interest only mortgage as a first time buyer. Most interest only mortgages are reserved for landlords with multiple properties.

Q

Do I need to save a deposit?

A

Most mortgages need at least a 5% deposit, but some are available alongside government schemes to help you get on the property ladder.

Q

Does my credit record matter?

A

Yes, it will show lenders if you can keep up with repayments on a mortgage. Here is why your credit record matters.

Q

Can I get a mortgage with someone else?

A

Yes, and getting a joint mortgage means you could borrow more and make the repayments easier to afford. Here is how joint mortgages work.

Q

Are 95% mortgages available to first time buyers?

A

Yes, some lenders offer mortgages to first time buyers with a 5% deposit. You can find these deals in this comparison.

Q

Can I afford a mortgage?

A

You can check if you can afford one by working out how much you earn and spend. Compare this to how much buying a home will cost you.

About our mortgage comparison

Q

Who do we include in this comparison?

A

We include mortgages from every lender in the UK. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.

Last updated: 14 May, 2021