First-Time Buyer Mortgage Guide 2025: Everything You Need to Know Before You Apply

Buying your first home is an exciting milestone — but it can feel overwhelming if you’re unsure where to start. The good news? Getting your first-time buyer mortgage approved doesn’t have to be complicated. With the right guidance, preparation and support, you can move through the process confidently and avoid the common mistakes that slow buyers down.

This guide covers everything UK first-time buyers need to know in 2025: deposits, affordability, credit checks, required documents, available schemes, timelines, and how to give yourself the best chance of approval first time.

What Counts as a First-Time Buyer Mortgage in 2025?

A first-time buyer is someone who has never owned a residential property in the UK or abroad. Lenders use this definition for affordability checks, and HMRC use it to determine eligibility for Stamp Duty relief.

You are considered a first-time buyer if:

• you have never owned a home

• you are not named on a property, even if you don’t live in it

• your partner also doesn’t own a property (for joint applications)

  
  

You are not considered a first-time buyer if:

• you previously owned a home but sold it

• you inherited a property

• your name is on a home you don’t live in

• you own a share in a property abroad

  
  

This matters because first-time buyers benefit from reduced Stamp Duty, and some lenders offer preferential rates for new buyers entering the market.

How Much Deposit Do First-Time Buyers Need?

In 2025, most lenders require a minimum deposit of 5%, although 10% gives you access to better rates and more lender options.

If you’d like more personalised guidance, you can also visit our dedicated page on first-time buyer mortgage support to explore your options in more detail.

Example deposits based on UK average prices

• £200,000 home → 5% deposit = £10,000

• £250,000 home → 5% deposit = £12,500

• £300,000 home → 10% deposit = £30,000

  
  

Gifted Deposits

Many first-time buyers receive help from family. Gifted deposits are widely accepted, but the lender will need:

• a signed gifted deposit letter

• identification for the gifter

• evidence of funds

  
  

Builder Incentives

If buying new-build, be aware that incentives cannot usually count towards the deposit, but they can help with costs (legal fees, flooring, cashback, etc.)

How Much Can You Borrow as a First-Time Buyer?

Lenders calculate affordability using income multiples and your monthly financial commitments.

If you want a clearer picture of your borrowing potential, try our mortgage affordability calculator to estimate how much you could borrow based on your income.

Typical income multiples in 2025

• Standard lenders: 4.0× to 4.49× annual income

• Strong credit and higher income: 4.75×–5.5× with some lenders

For joint applications, lenders assess combined income but also factor in dependents, childcare costs, loans and credit commitments.

What affects how much you can borrow?

• Your income (employed, self-employed, overtime, bonuses)

• Your monthly bills and credit commitments

• Debt-to-income ratio

• Credit score

• Deposit size

• Length of mortgage term

  
  

Using a mortgage calculator gives you a rough guide, but a broker can provide accurate figures based on real lender criteria.

Documents First-Time Buyers Need for a Mortgage

Preparing your paperwork early speeds up the entire process.

Typically required:

• Photo ID (passport or driving licence)

• Proof of address

• 3 months’ bank statements

• 3 months’ payslips (or 1–2 years’ accounts if self-employed)

• Credit report (Experian, Equifax or TransUnion)

• Proof of deposit

  
  

For self-employed applicants:

• HMRC SA302 tax calculations

• Tax year overviews

• Business accounts

• Accountant’s reference (if required)

Being organised here can shave weeks off your application timeline.

First-Time Buyer Schemes Available in 2025

There are several government-backed or specialist schemes that help first-time buyers:

1. Shared Ownership

Buy a share of a property and pay rent on the remaining share. Deposit required is only based on the share you buy.

2. Deposit Unlock

Designed for new-build homes, allowing 5% deposits with competitive rates.

3. Right to Buy

For eligible council tenants; discounts can often serve as the deposit.

4. Forces Help to Buy

Allows military personnel to borrow up to 50% of salary interest-free.

5. First Homes Scheme

Properties sold at a 30%+ discount to local first-time buyers (available in select areas).

A mortgage broker can guide you through qualifying criteria and which lenders support these schemes.

How to Improve Your Mortgage Approval Chances

If you want the strongest possible application, consider these steps:

✔ Improve your credit score

• Register on the electoral roll

• Reduce credit card balances

• Avoid taking new loans before applying

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✔ Reduce unnecessary spending

Lenders analyse your last 3 months of bank statements closely. Avoid:

• excessive gambling

• high-cost borrowing

• irregular large transfers

• buy-now-pay-later patterns

  
  

✔ Save a higher deposit if possible

Even an extra 2–5% can unlock better interest rates and lower monthly payments.

✔ Avoid major life changes before applying

Job changes, new credit lines, or inconsistent income can complicate applications.

What a Mortgage Broker Does for First-Time Buyers

Many first-time buyers assume going directly to a bank is the simplest route — but it can severely limit your options.

A mortgage broker can:

• compare hundreds of lenders, including those not available to the public

• find lenders matching your specific situation

• help with schemes and complex income types

• explain every step simply and clearly

• prepare your documents and applications

• liaise with estate agents and solicitors

• speed up your approval (and reduce stress)

At PD Finance, we specialise in helping first-time buyers understand their options clearly and feel confident throughout the process.

Step-by-Step First-Time Buyer Timeline

1. Check affordability

Speak with a broker or use your calculator to understand your budget.

2. Save your deposit

Aim for 5–10% where possible.

3. Prepare documents

Organise bank statements, payslips, credit report and ID.

4. Get an Agreement in Principle (AIP)

This shows estate agents you are serious and helps you negotiate.

5. Find a property & make an offer

Once accepted, the formal mortgage process begins.

6. Submit the full mortgage application

Your broker submits all documents to the lender.

7. Valuation carried out by the lender

Ensures the property value aligns with your agreed purchase price.

8. Underwriting & final checks

The lender reviews everything to confirm affordability and risk.

9. Mortgage offer issued

Once approved, the offer is sent to you and your solicitor.

10. Exchange & completion

Contracts are exchanged and you get your keys!

Common First-Time Buyer Mistakes to Avoid

• Applying for credit during the mortgage process

• Relying on only one bank for options

• Not checking your credit report early

• Undisclosed loans or debts

• Large unexplained bank transfers

• Forgetting about solicitor fees and moving costs

• Believing the AIP is a guarantee (it isn’t)

  
  

Avoiding these will make your journey far smoother.

If you’re already a homeowner and thinking about switching products, our guide to remortgage options explains how to secure a better deal.

Ready to Start Your First-Time Buyer Journey?

Buying your first home should feel exciting — not stressful. At PD Finance, we guide you through every step, explain your options clearly, and help you feel confident from start to finish.

Whether you need help with affordability, deposit options, credit issues or understanding schemes, we’re here to support you.

8 FAQ Questions & Answers

1. How much deposit do I need as a first-time buyer in the UK?

Most first-time buyers need a 5%–10% deposit. While 5% is the minimum for many lenders, a 10% deposit often unlocks better rates and more options.

2. Can I get a mortgage with bad credit as a first-time buyer?

Yes — lenders offer mortgages for buyers with defaults, missed payments, or CCJs. You may need a higher deposit (often 10%–15%) and rates can be higher, but a specialist broker can find suitable lenders.

3. How long does the first-time buyer mortgage process take?

From application to mortgage offer, it usually takes 2–6 weeks, depending on the lender, your documents, valuation availability, and how complex your case is.

4. What income do mortgage lenders count for first-time buyers?

Lenders typically use basic salary plus regular overtime, bonuses, commission, or benefits. Self-employed applicants use their tax calculations (SA302s) and yearly accounts.

5. Can I use a gifted deposit for my first home?

Yes — most lenders accept gifted deposits from close family members. The gifter must provide ID, proof of funds, and a signed gift letter confirming the money is not a loan.

6. What is an Agreement in Principle (AIP)?

An AIP is a lender check that shows how much you may be able to borrow. It isn’t a guaranteed mortgage offer, but it helps you make offers on properties and shows sellers you’re serious.

7. What fees do I need to budget for as a first-time buyer?

Typical fees include: solicitor fees, survey/valuation fees, mortgage arrangement fees, moving costs, and sometimes broker fees. Many first-time buyers forget to budget for these early on.

8. Is it better to use a mortgage broker or go direct to a bank?

A broker can compare hundreds of lenders, find better deals, check affordability accurately, and manage the process for you. Banks only offer their own products, which may limit your options as a first-time buyer.

To learn more about who we are and how we support homebuyers across the UK, visit our About PD Finance page.

The information in this article is for guidance only and does not constitute personal advice. Mortgage recommendations will depend on your individual circumstances.

We do not charge a fee when you stay with your current lender (a Product Transfer). Our typical fees are £250 for a remortgage, £500 for a purchase mortgage, and £750 for adverse credit mortgages. The exact fee will depend on your circumstances and will be confirmed at your free initial consultation.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured against it.