One of the most common questions we get asked at Fortitude Mortgage Brokers is “how much deposit does a first time buyer need?” After all, it’s quite a big factor in deciding whether you’re dream of owning your own home is likely to become a reality.
Technically the minimum deposit required for a first time buyer is 5%. However there’s a big caveat. Whilst a lender may have products available that require just a 5% deposit, that doesn’t mean you’ll match their criteria, or pass their assessment. On that note it’s important to point out that the lower your deposit percentage, the greater the risk is to the lender. And that’s means the more strict lenders are when it comes to accepting applications. Conversely, the greater your deposit percentage, the more flexible lenders tend to be when it comes to their underwriting/acceptance criteria.
Besides underwriting criteria, the amount of deposit required from first time buyers may also be impacted by economic factors, lenders’ appetite for risk and government schemes. The amount of deposit required will also be dependent upon your specific circumstances. For example, if you have bad credit or perhaps are nearer to retirement age, lenders may require a larger deposit.
As well as the amount of deposit you have available, another factor that lenders will look at is the source of your deposit. Each lender will have different rules in terms of which sources they will accept.