Short answer: most people buying a home in Scotland need a deposit of at least 5 per cent of the purchase price. On a £200,000 property that is £10,000. Some buyers put down considerably less, and a small number buy with no deposit of their own at all, using a family gift, a lender scheme or the First Home Fund.
The 20 per cent figure that most people have in their heads is not a requirement. It is a hangover from a period when lending was tighter, and it has delayed a great many purchases that could have gone ahead years earlier.
I am Ingrid Cairns and I am a mortgage adviser based in Strathaven, South Lanarkshire. I work with buyers across Strathaven, Hamilton, East Kilbride, Lanark, Glasgow, Inverness and the rest of Scotland. This guide sets out the deposit routes I see used most often, and who each one tends to suit.
The 5 per cent deposit
A 5 per cent deposit is the most common starting point for first-time buyers in Scotland. On a £150,000 flat that is £7,500. On a £200,000 house it is £10,000. On a £250,000 property it is £12,500.
Lending at 95 per cent of the property value is available from mainstream lenders and is used routinely. You will normally need a clean recent payment history, evidenced income, and outgoings that leave enough headroom for the payment.
The trade-off is rate. A 5 per cent deposit means borrowing at 95 per cent loan to value, and rates at that level are higher than at 90 or 85 per cent. If you are close to the next threshold, saving for a few more months can reduce your monthly payment meaningfully. That is a calculation worth running before you commit either way.
Low deposit and fixed sum products
Some lenders now offer products built around a fixed cash deposit rather than a percentage of the purchase price. For a buyer who has been trying to save 5 per cent of a number that keeps rising, this changes the maths entirely.
These products come and go, and the terms attached to them vary. Availability at any given moment is one of the things a broker is genuinely useful for, because the product that suits you may not be the one being advertised.
Gifted deposits from family
A gifted deposit is money given to you by a family member towards your purchase, with no expectation of repayment. It is one of the most common routes into a first home in Scotland and lenders deal with it every day.
There are three things lenders will want to establish. Where the money came from, that the person giving it can afford to give it, and that it is a gift rather than a loan. The last point matters, because a loan affects your affordability calculation and a gift does not.
The giver will usually be asked to sign a short declaration confirming the money is a gift and that they will hold no interest in the property. Your solicitor will handle that alongside the anti-money-laundering checks on the source of the funds.
Most lenders will accept a gift from parents, grandparents, siblings or in some cases wider family. Policy varies on who counts as family, so it is worth checking early rather than assuming.
- Start the conversation before anyone views a property, not after an offer is accepted
- Ask the giver to keep the money in an accessible account rather than tied up
- Expect to evidence where the funds came from, particularly if they arrived recently
- Confirm in writing that it is a gift, not a loan
Buying with no deposit of your own
There are routes into a purchase that require no deposit from the buyer. They generally rely on either a family arrangement, where a relative provides security or savings held with the lender, or a lender scheme that uses rental payment history as evidence of affordability.
These suit a particular type of applicant. Someone paying rent comfortably each month at or above the level of the proposed mortgage payment, with a clean payment record, who has no realistic capacity to save while that rent continues.
They suit far less well where there is recent adverse credit, irregular income that is difficult to evidence, or a purchase at the very top of affordability. Without a deposit there is no equity cushion, and that matters if property values move.
Rates are typically higher than deposit-backed equivalents. This is a legitimate route rather than a shortcut, and it should be assessed on that basis.
The First Home Fund
The First Home Fund is a Scottish Government scheme aimed at first-time buyers who are financially ready to own a home but cannot bridge the deposit gap on their own.
It is aimed squarely at a particular group. People with steady income and sensible outgoings, frequently paying more in rent each month than a mortgage on an equivalent property would cost, who have not been able to accumulate a deposit fast enough against rising values.
Conditions apply and eligibility is specific, so it is worth checking your position properly rather than assuming you do or do not qualify. Scheme terms are set by the Scottish Government and can change, so always confirm current criteria before making plans around it.
What a bigger deposit actually buys you
It is worth being clear that a larger deposit is not just about access. It affects what you pay every month for years.
Lenders price in bands, usually at 95, 90, 85, 80 and 75 per cent loan to value. Crossing from one band into the next generally reduces your rate. A buyer who is £2,000 short of the next band may be better waiting three months than proceeding immediately.
A larger deposit also gives you a buffer. If values fall, equity protects your ability to remortgage at the end of your initial deal rather than being stuck on a lender’s standard variable rate.
The costs that are not the deposit
Deposit is the number everyone focuses on, but it is not the only cash you need at purchase. In Scotland, budget for the following alongside it.
- Land and Buildings Transaction Tax, though first-time buyer relief means many first purchases in Scotland fall below the threshold
- Additional Dwelling Supplement at 8 per cent if you are buying a second property
- Solicitor and conveyancing fees
- Home report costs if you are selling, and any survey you commission as a buyer
- Mortgage product or arrangement fees, which can sometimes be added to the loan
- Moving costs, which people routinely underestimate
Working out what you actually need
The honest position is that there is no single deposit figure for buying in Scotland. There is a figure for you, and it depends on the property you are buying, your income, your credit history and whether family are in a position to help.
What I would say is this. If you are currently saving towards a number you picked out of the air, or you have quietly decided that buying is out of reach, check it with someone before you accept it as fact. It takes very little time to establish where you actually stand, and a good number of people find the gap is smaller than they thought.
Frequently asked questions
What is the minimum deposit to buy a house in Scotland?
For most buyers the minimum is 5 per cent of the purchase price, which is £10,000 on a £200,000 property. Some products require less, and a small number of routes require no deposit from the buyer at all, using a family arrangement or a lender scheme.
Do you need a 20 per cent deposit to buy a house in Scotland?
No. A 20 per cent deposit is not required. It will usually secure a lower interest rate than a smaller deposit, but 5 per cent deposit lending is widely available from mainstream lenders.
Can my parents give me a deposit for a house in Scotland?
Yes. Gifted deposits are common and lenders accept them routinely. The giver will normally need to sign a declaration confirming the money is a gift rather than a loan and that they will hold no interest in the property, and the source of the funds will need to be evidenced.
Can you buy a house in Scotland with no deposit?
It is possible through certain family assisted arrangements and lender schemes that use rental payment history as evidence of affordability. These suit applicants with a clean payment record and no capacity to save, and rates are generally higher than deposit-backed products.
What is the First Home Fund?
The First Home Fund is a Scottish Government scheme for first-time buyers who are financially ready to own a home but cannot bridge the deposit gap themselves. Eligibility conditions apply and scheme terms are set by the Scottish Government.
Do I pay stamp duty on a first home in Scotland?
Scotland has Land and Buildings Transaction Tax rather than stamp duty. First-time buyer relief means many first purchases fall below the point at which tax becomes payable, though this depends on the purchase price.
Get in touch
If you are working out what you need, or you want to know whether a family gift or a scheme would change your position, I am happy to go through it with you. There is no cost to the conversation and no obligation at the end of it.
Call 01357 680660 or get in touch with me via the contact form here.
