Last updated: 4 November 2026. Figures for the 2026/27 tax year. General information, not financial advice.
Paying rent and saving for a deposit at the same time can feel like trying to fill a bath with the plug out. Rent goes up, bills go up, and the deposit target seems to move further away every year.
But plenty of people do it, and it usually comes down to three things: knowing your real target, making saving automatic, and using every bit of free money available (like the Lifetime ISA bonus). This guide walks you through a realistic plan.
Step 1: work out how much you actually need
Your deposit is only part of the cost of buying. Before you set a target, add up:
| Cost | Typical amount (check your own figures) |
|---|---|
| Deposit | Usually at least 5% of the price; 10% or more gets better rates |
| Stamp Duty | Often £0 for first-time buyers (see below) |
| Solicitor / conveyancing | Often around £1,000 to £2,000 |
| Survey | A few hundred pounds upwards |
| Mortgage fees | Some deals have a fee; some don’t |
| Moving costs | Van, removals, basics for the new home |
Estimates only. Get quotes for your own situation.
Example deposits:
| Home price | 5% deposit | 10% deposit | 15% deposit |
|---|---|---|---|
| £200,000 | £10,000 | £20,000 | £30,000 |
| £250,000 | £12,500 | £25,000 | £37,500 |
| £300,000 | £15,000 | £30,000 | £45,000 |
Stamp Duty for first-time buyers (England and Northern Ireland)
Since 1 April 2025, first-time buyers pay:
- 0% on the first £300,000
- 5% on the part from £300,001 to £500,000
- No first-time buyer relief if the home costs more than £500,000
Scotland (LBTT) and Wales (LTT) have their own rules. My Stamp Duty calculator works out your figure, and my guide to the hidden costs of buying a house covers everything else.
Step 2: find out what you can save each month
Look at your last three months of bank statements and work out:
- Take-home pay each month
- Fixed costs: rent, council tax, bills, travel, childcare, debt repayments
- Flexible spending: food, eating out, shopping, subscriptions
What’s left is your starting savings figure. Then look for things to cut or switch. Even £100 a month freed up is £1,200 a year towards your deposit.
How long will it take?
| Monthly saving | After 1 year | After 2 years | After 3 years |
|---|---|---|---|
| £200 | £2,400 | £4,800 | £7,200 |
| £400 | £4,800 | £9,600 | £14,400 |
| £600 | £7,200 | £14,400 | £21,600 |
Before interest or any Lifetime ISA bonus. With a LISA, the bonus adds 25% on up to £4,000 a year.
If the timescale feels too long, my rent vs buy calculator helps you compare the real costs of each.
Step 3: use a Lifetime ISA if you can
The Lifetime ISA (LISA) is the single biggest help for many first-time buyers, because the government adds a 25% bonus to what you pay in.
According to GOV.UK:
- You must be 18 to 39 to open one
- You can pay in up to £4,000 a year (until you’re 50)
- The government adds 25%, up to £1,000 a year
- You can use it to buy your first home costing up to £450,000
- You must have made your first payment at least 12 months before the purchase, buy with a mortgage and use a conveyancer; the property must be your main home
- Other unauthorised withdrawals normally have a 25% withdrawal charge, reducing your own savings as well as removing the bonus. From 29 October 2026, eligible first-home purchases above £450,000 instead have a 20% charge through the conveyancer process. Withdrawals from age 60 or for qualifying terminal illness are charge-free
Example: if you pay in £4,000 a year for 3 years, the bonus adds £3,000, giving you £15,000 before interest. A couple can each have a LISA and use both on the same home.
Watch out for:
- The £450,000 cap. In some areas, especially London and the South East, this can be a problem. For eligible first-home purchases above it, a 20% withdrawal charge applies from 29 October 2026; the £450,000 charge-free cap remains.
- The 12-month rule. Open and make a first payment early, even a small one, to start the clock.
- The withdrawal charge. Only use a LISA for money you’re sure is for a first home (or retirement).
- Future changes. The government has consulted on replacing the LISA with a new first-time buyer ISA. Nothing had launched at the time of writing, and existing LISAs keep their rules for now. My new ISA rules guide tracks the changes.
My Lifetime ISA calculator shows how much your bonus could add up to, and my Lifetime ISA blueprint for first-time buyers goes through it step by step.
Step 4: keep the rest somewhere safe and earning
Money you’ll need within a few years is usually best in cash, not shares, because you don’t want the value to drop just before you buy.
- Easy-access savings or a cash ISA for money above your LISA limit
- Regular saver accounts, which often pay higher rates if you pay in monthly
- Check accounts are protected by the FSCS (up to £120,000 per eligible person, per authorised firm (brands sharing one banking licence share the limit))
See my best UK savings accounts and ISAs explained guides.
Step 5: cut your biggest costs
The biggest wins usually come from the biggest bills:
- Rent: could you move somewhere cheaper for a year or two, rent a room, or share? It’s a big change, but it’s the fastest way to speed things up.
- Council tax: if you live alone, claim the 25% single person discount. My council tax discount calculator shows what you’d save.
- Childcare: check you’re getting free childcare hours and Tax-Free Childcare. My childcare costs guide explains both.
- Food: meal plan and batch cook. See my cheap family dinners.
- Subscriptions and bills: cancel what you don’t use and haggle at renewal.
- Debt: high-interest debt slows everything down. Paying it off first often makes sense. See my Debt and Credit hub.
Step 6: boost your income
- Sell things you don’t need. My things to sell for cash list has ideas.
- Pick up overtime or a side hustle, and put all of it into your deposit pot.
- Put windfalls (bonuses, tax refunds, birthday money) straight in. You might even be owed a tax refund.
Step 7: get mortgage-ready while you save
Saving the deposit is only half the job. Lenders will also look at your credit history and bank statements.
- Register to vote at your address, which helps lenders confirm who you are
- Check your credit report with all three agencies and fix mistakes
- Pay everything on time and keep credit card balances low
- Report your rent payments to the credit agencies if your landlord or a rent reporting service offers it. See does renting affect your credit score?
- Tidy your bank statements for a few months before applying. My 90-day bank statement cleanse explains what lenders look for
When you’re close, my first-time buyer mortgage checklist takes you through the next steps. A fee-free mortgage broker can also help.
Saving with children and childcare costs
If you’re paying rent and childcare, it can feel like there’s nothing left. A few things help:
- Claim every bit of support: Child Benefit, free hours, Tax-Free Childcare, and Universal Credit childcare help if you qualify. My Child Benefit guide and childcare costs guide explain each one.
- Set a smaller, steady target (even £50 a month into a LISA still gets the 25% bonus)
- Remember childcare costs usually fall once children start school, so your saving can speed up then
- Use a sinking fund for big yearly costs so they don’t eat your deposit
House deposit: people also ask
How much deposit do I need for a house in the UK?
Usually at least 5% of the price, though 10% or more often gets you a better interest rate. On a £250,000 home, that’s £12,500 for 5% or £25,000 for 10%.
How can I save for a house while renting?
Set a clear target, automate a monthly amount on payday, open a Lifetime ISA if you’re eligible for the 25% bonus, cut your biggest costs and put any extra income straight into your deposit pot.
Is a Lifetime ISA worth it for a first home?
For many first-time buyers, yes, because of the 25% bonus (up to £1,000 a year). But check the £450,000 charge-free price cap, the 20% charge for eligible purchases above it, and the usual 25% charge for other unauthorised withdrawals first.
Do first-time buyers pay Stamp Duty?
In England and Northern Ireland, not on the first £300,000, and 5% on the part up to £500,000. There’s no first-time buyer relief over £500,000.
How long does it take to save a house deposit?
It depends on your target and how much you can save. Saving £400 a month gives £14,400 in 3 years before interest, plus up to £3,000 more with a Lifetime ISA bonus.
Summary
- Know your full target: deposit plus solicitor, survey, moving and any Stamp Duty.
- Automate saving on payday and keep it in a separate account.
- Use a Lifetime ISA if you’re 18 to 39 and buying under £450,000: the bonus is 25%.
- Cut big costs, boost income and get mortgage-ready while you save.
Next step: try the Lifetime ISA calculator, or compare renting vs buying.
General information only, not financial advice. Speak to a qualified mortgage adviser before applying.
Sources (checked 4 November 2026): Official source for corrected claim · Official source for corrected claim · Official source for corrected claim · GOV.UK: Lifetime ISA · GOV.UK: Stamp Duty Land Tax rates · GOV.UK: ISAs · FSCS: deposit protection