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  • First-Time Buyer

28 July 26

6 min read

5% Deposit Mortgages: Which Lenders Are Open for Business in 2026?

Saving a 5% deposit is an achievement in itself — but finding a lender willing to accept it has become harder. Following the withdrawal of the government Mortgage Guarantee Scheme in mid-2025, the 95% LTV market is now smaller and more selective than it was two years ago. Here is an honest picture of where it stands in mid-2026.

1

Who is still lending at 95% LTV?

The 95% LTV market is dominated by building societies and mid-tier lenders rather than the big high-street banks, most of whom pulled back significantly after the scheme closed. Nationwide, Skipton Building Society, Yorkshire Building Society, and a handful of smaller regional lenders continue to offer 5% deposit products — though criteria have tightened.

Halifax and Barclays retain limited 95% LTV ranges but typically restrict them to properties under £500,000 and apply stricter income multiple caps — usually 4x rather than the 4.5x available at higher LTV tiers. Santander exited the 95% market entirely in early 2026.

2

What you need to qualify

Lenders at 95% LTV are compensating for higher risk through tighter eligibility rather than prohibitively expensive rates. Common requirements across the active lenders include: a minimum income of £25,000 (some lenders set this higher), a clean credit history with no missed payments in the last 24 months, no outstanding unsecured debt above a set threshold, and a maximum property value (typically £500,000–£600,000).

New build properties carry additional restrictions. Most 95% LTV lenders will not lend on new build flats and apply a maximum 85–90% LTV cap on new build houses. The rationale is the risk of a day-one valuation fall on a newly completed property — which at 95% LTV leaves almost no equity buffer.
Self-employed applicants face a further hurdle at this LTV tier. Several lenders restrict 95% products to employed borrowers with a minimum of two years in the same role. Others will consider self-employed applicants but require three years of accounts rather than the usual two.

3

The rate premium — and whether it matters

Rates at 95% LTV carry a meaningful premium compared to 85% or 90% LTV products. A typical two-year fix at 95% LTV currently sits in the 5.2–5.8% range, compared to 4.3–4.7% at 85% LTV. On a £200,000 loan, that translates to roughly £80–£120 more per month.

The question is whether it is worth waiting to save a larger deposit. If saving an extra 5% takes 18 months, you need to weigh the higher monthly cost of a 95% product against 18 months of rent payments and the risk that property prices rise in the interim. In most cases, getting onto the ladder sooner — even at a higher rate — works out better financially over a five-year horizon, particularly if the property is in an area with reasonable price growth.

4

Shared Ownership as an alternative

For buyers who cannot meet the criteria for a 95% LTV mortgage, Shared Ownership remains an alternative route. You purchase a share of the property — typically 25–75% — and pay rent on the remaining portion owned by the housing association. Your mortgage deposit is calculated on the share you are buying, not the full property value, which substantially reduces the cash required upfront.

A key change in 2021 made Shared Ownership more flexible: minimum initial shares dropped from 25% to 10%, and the staircasing process (buying additional shares over time) became simpler. Shared Ownership properties are predominantly new build or affordable housing stock — choice is limited, but for eligible buyers in the right areas, it remains a credible first step onto the ladder.
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