Key takeaways

• True no-deposit mortgages are rare in the UK but can be available through guarantor schemes where family members back 100% loan-to-value (LTV) loans.

• Your credit score can influence approval chances. You can check yours for free with ClearScore before applying.

• Government-backed schemes like shared ownership can reduce deposit requirements. The Help to Buy Equity Loan closed to new applicants in England in 2023.

• Alternative options include gifted deposits from family and low-deposit mortgages that may require around 5%.

• Higher interest rates and additional protections typically apply to high LTV deals, which can increase long-term costs.

• ClearScore’s free credit monitoring and mortgage marketplace can help you explore options without a hard search on your credit file.

No-deposit mortgages are limited in the UK market and tend to be available only in specific circumstances, such as through guarantor arrangements or government-backed schemes. Although true zero-deposit mortgages largely disappeared after 2008, several pathways remain for buyers with minimal upfront savings. These include guarantor mortgages, government schemes and creative financing solutions that can help you work towards buying a home.

Understanding no-deposit mortgages

What is a no-deposit home loan?

A no-deposit home loan can allow you to buy a property without putting down the traditional 5-20% deposit. These mortgages, sometimes called 100% LTV mortgages, typically involve borrowing the full value of the property. Unlike conventional mortgages, where you might borrow 90-95% of the home’s price, a no-deposit mortgage covers the entire purchase amount.

The key difference comes down to risk. Traditional mortgages use your deposit as security, so if property values fall, your deposit acts as a buffer for the lender. With no-deposit mortgages, lenders usually require alternative security, often in the form of a guarantor or higher interest rates.

Track record mortgages

Track record mortgages can offer reliable renters a route into homeownership by using a history of on-time rent payments as evidence of affordability, in place of a large deposit. For people stuck in the rent trap, this type of product can help turn monthly rent payments into a step towards owning a home.

Pros and cons of buying a house with no deposit

Potential benefits:

• May allow you to buy a property sooner, although this can increase financial risk and monthly costs and may not suit those without strong financial reserves.

• Your mortgage payments will usually include some capital repayment, but equity building tends to be slow at first, and property values can fall.

• Property prices can rise or fall and cannot be predicted, so taking on higher borrowing costs in case prices rise may not always be financially beneficial.

• You can keep your savings for emergencies, moving costs or home improvements.

Drawbacks to consider:

• Higher interest rates can increase monthly payments and total cost of borrowing.

• There is a risk of negative equity if house prices fall.

• Lending criteria and credit score requirements tend to be stricter.

• Fewer lender options can reduce your choice of deals.

• Lenders may require life insurance or payment protection. Unlike in the US, UK no-deposit mortgages do not typically require private mortgage insurance (PMI).

Who could qualify for a mortgage without a deposit?

Lenders typically look for strong financial profiles for no-deposit mortgages. Common criteria include:

• Credit score and credit file: Lenders assess your full credit file (for example via Equifax or Experian). A history of on-time payments and low-risk borrowing behaviour is usually important. There is no single universal score threshold, but a strong profile generally helps.

• Income stability: A steady employment history, often around two or more years in a role, with earnings that comfortably cover your mortgage payments.

• Affordability and stress testing: Lenders typically assess affordability by stress-testing your ability to pay at rates above the current level, rather than using a single fixed debt-to-income ratio.

• Guarantor requirements: For guarantor deals, family members usually need to show sufficient income, equity in their own property and a strong credit profile to back the loan.

No-deposit mortgage options available

Government-backed schemes: shared ownership with a low deposit

Shared ownership involves buying a percentage of a property (typically 25-75%) while paying rent on the remainder. A deposit is usually required, but on a smaller share, so the cash needed up front can be much lower than for a full purchase. Availability varies by location and housing association.

How it works:

• You buy a share of the property through a housing association.

• You pay a mortgage on your share, plus rent on the remaining portion.

• You may be able to buy additional shares over time, a process known as staircasing.

• Restrictions can apply to resale and subletting.

Eligibility requirements:

• Household income is typically below £80,000 outside London (£90,000 in London).

• First-time buyer status, or previous homeowner status in some circumstances.

• Unable to afford a suitable home on the open market.

• You will need to pass affordability assessments for both the mortgage and rent portions.

Low-deposit alternatives for first-time buyers

Several lenders offer mortgages that require only a small deposit:

• 95% LTV mortgages: Require a 5% deposit and tend to be more widely available than true no-deposit options.

• 100% LTV family mortgages: Some building societies offer products where family members secure the loan against their own savings or property, often held in a separate account that can earn interest.

• Rent-to-buy schemes: Some local authorities and housing associations offer schemes where rent payments contribute towards eventual ownership, which can reduce the traditional deposit needed.

Deposit assistance and gift funds

Family contributions can help reduce or remove the need for a personal deposit, particularly when paired with high-LTV mortgages:

• Gifted deposits: Most lenders accept deposits gifted by immediate family members. A gift letter is usually needed confirming the money is not a loan.

• Family springboard mortgages: Family members place a percentage of the property value (often around 10%) into a linked savings account as security, allowing you to borrow up to 100% of the purchase price while their savings can still earn interest.

• Local authority grants: Some councils offer first-time buyer grants or shared equity loans that may reduce upfront costs, particularly in areas with regeneration programmes.

Improving your chances of approval

Check and build your credit score with ClearScore

Your credit score can have a significant influence on mortgage approval chances. ClearScore gives you free, lifetime access to your Equifax credit report and score, so you can understand your borrowing profile before applying.

Steps that can help improve your credit score:

• Check your report for errors and dispute any inaccuracies.

• Register on the electoral roll at your current address.

• Pay bills on time, including mobile phone and utility bills.

• Try to keep credit utilisation below 30% of your available limits.

• Avoid making multiple credit applications in a short period.

ClearScore’s personalised insights can highlight specific actions that may help improve your score, such as reviewing unused credit accounts or considering how balances are spread across cards.

Calculate affordability with a mortgage calculator

Mortgage calculators can help you understand your potential borrowing capacity before applying. Key factors include:

• Income multiples: Many lenders offer around 4 to 4.5 times your annual income, though some may stretch further for higher earners with strong credit profiles.

• Monthly affordability: Lenders typically stress-test your ability to pay at rates above current levels, to check you could still cope if rates rose.

• Existing commitments: Monthly payments on credit cards, loans and car finance reduce the amount you can borrow.

Online calculators give general estimates, while a qualified mortgage adviser can access lender-specific criteria for a more detailed assessment.

Reduce debt and stabilise income

Strengthening your financial profile can help improve your chances of approval.

Debt reduction strategies:

• Pay down credit card balances to help improve your overall debt position.

• Consider whether debt consolidation could reduce monthly payments.

• Try to avoid taking on new credit while mortgage shopping.

• Close unused credit accounts to reduce the amount of available credit on your file.

Income stability measures:

• Try to maintain steady employment throughout your application.

• If you are self-employed, provide thorough documentation of your income.

• Consider waiting until any probationary period at a new job has ended.

• Build up savings to demonstrate financial discipline, even when a deposit isn’t required.

Interest-only mortgages for lower monthly costs

Interest-only mortgages can reduce monthly payments for borrowers with limited cash, but a credible plan to repay the capital is essential.

*Figures are illustrative only, based on a £200,000 mortgage at 6.5% over 25 years. The 6.5% rate is used for illustration only and actual rates will vary depending on individual circumstances and lender criteria.

Interest-only considerations:

• Lenders usually require a credible repayment strategy, such as investments, inheritance or property sale proceeds.

• There can be a higher risk if your repayment plan doesn’t go to plan.

• Lenders typically review interest-only mortgages regularly throughout the term.

• These products may not be suitable for first-time buyers without financial experience.

Using ClearScore to apply with confidence

Monitor your credit report for free

ClearScore provides lifetime access to your Equifax credit report and score, with regular updates. This visibility can help you to:

• Track improvements: Watch how your score changes as you put credit-building habits in place.

• Spot issues early: Identify possible fraud or reporting errors before they affect a mortgage application.

• See what lenders may see: Get a clearer view of the information lenders consider, including payment history, credit mix and account ages.

ClearScore Protect adds free identity monitoring and alerts for suspicious activity, helping you keep your credit profile secure as you go through the home-buying process.

Compare loans and credit options via the marketplace

ClearScore’s marketplace shows loan and credit card offers based on your credit profile, using soft searches that don’t affect your score.

How this can help with mortgage preparation:

• Get an idea of the borrowing rates that may be available to you before formal applications.

• Compare consolidation options that may help improve your overall financial picture.

• Explore credit-building products if your score needs improvement.

• See multiple eligibility results without leaving a hard footprint on your credit file.

Pre-approval doesn’t always guarantee acceptance and is subject to lenders’ checks of your credit status.

Check eligibility without risk

You can use ClearScore’s eligibility tools to get a sense of your approval chances before committing to a full mortgage application.

Benefits of checking with ClearScore:

• Get a better idea of realistic borrowing amounts and rates.

• Identify any credit issues that may need attention.

• Move through your home search with more clarity about your financing options.

• Have more informed conversations with estate agents and sellers.

This approach can help you avoid multiple hard mortgage searches that may affect your credit score while you’re house hunting.

FAQs on no-deposit mortgages

Can I really get a mortgage with no deposit in the UK?

It is possible, though options are limited. Guarantor mortgages can allow 100% LTV lending where family members provide security. Schemes such as shared ownership, or low-deposit mortgages combined with gifted deposits, can also reduce or remove the need for personal cash savings.

What credit score do I need for a no-deposit mortgage?

There is no single fixed score that all lenders use. Stronger credit profiles tend to access better rates, and no-deposit mortgages typically have stricter criteria than standard loans. You can check your score for free with ClearScore and work on improvements before applying.

Are guarantor mortgages safe for family members?

Guarantors are not usually responsible for monthly payments unless you default, but their property or savings act as security for the loan. They should consider taking independent legal advice to make sure they understand the risks, including potential loss of property if you cannot keep up payments.

What happens if house prices fall after buying with no deposit?

You could enter negative equity, where you owe more than the property is worth. This doesn’t affect your monthly payments, but it can limit your ability to remortgage or move until prices recover or you reduce the loan balance.

Can ClearScore help me find no-deposit mortgage deals?

ClearScore’s marketplace shows loan and mortgage offers based on your credit profile. It cannot guarantee no-deposit options, but it can help you understand the rates that may be available to you and identify lenders likely to consider your application.

Do I need mortgage insurance with a no-deposit mortgage?

Lenders do not universally require it, but life insurance or payment protection is often recommended due to the higher level of borrowing involved. Requirements can also vary for guarantor deals.

This article provides general information only and does not constitute personalised financial advice or a recommendation. Individual circumstances vary, and you may wish to seek independent advice before making financial decisions. Information is accurate at the time of writing and may change.