Buying Your First Home in 2026: Deposit, SDLT, LISA & True Costs Explained
Everything first-time buyers need to know in 2026: how much deposit you need, SDLT after the April 2025 changes, using a Lifetime ISA, Shared Ownership, and the full timeline from AIP to completion.
How much deposit do you actually need?
The deposit is your single biggest barrier to homeownership. Here's how it affects a £280,000 home purchase:
| Deposit % | Deposit amount | LTV | Typical rate (2-yr fix) | Monthly payment (25yr) |
|---|---|---|---|---|
| 5% | £14,000 | 95% | ~5.5% | £1,623 |
| 10% | £28,000 | 90% | ~4.8% | £1,522 |
| 15% | £42,000 | 85% | ~4.6% | £1,494 |
| 20% | £56,000 | 80% | ~4.4% | £1,467 |
| 25% | £70,000 | 75% | ~4.2% | £1,440 |
Going from 5% to 10% deposit saves approximately £101/month on the mortgage — that's £1,212/year just in payment reduction, plus lower total interest over the term.
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Open Mortgage calculatorSDLT (Stamp Duty) in 2026: what first-time buyers pay
The Autumn Budget 2024 ended the temporary first-time buyer SDLT relief extension. From 1 April 2025, the thresholds reverted:
First-Time Buyer SDLT rates (from April 2025)
| Property price | SDLT rate (FTB) |
|---|---|
| Up to £300,000 | 0% |
| £300,001 to £500,000 | 5% on portion above £300k |
| Over £500,000 | No FTB relief — standard rates apply |
Example calculations:
| Property price | SDLT payable (FTB) |
|---|---|
| £250,000 | £0 |
| £280,000 | £0 |
| £300,000 | £0 |
| £350,000 | £2,500 |
| £425,000 | £6,250 |
| £500,000 | £10,000 |
| £525,000 | Standard rates apply: £15,250 |
For most first-time buyers purchasing at the UK average price (around £280-290k), SDLT is still £0. But in London and the South East, where entry-level flats often cost £350-500k, the SDLT bill is significant.
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SDLT calculatorThe Lifetime ISA: the best deal for first-time buyers
A Lifetime ISA (LISA) is arguably the single best financial product available to first-time buyers. Here's why:
- You can contribute up to £4,000/year
- The government adds a 25% bonus — up to £1,000/year completely free
- Open before age 40 (access from age 60 for retirement, or at any age for a first home)
- Property must be your first home and worth £450,000 or less
- Must have held the LISA for at least 12 months before using it
LISA saving example
| Year | Your contribution | Government bonus | Total |
|---|---|---|---|
| 1 | £4,000 | £1,000 | £5,000 |
| 2 | £4,000 | £1,000 | £10,000 |
| 3 | £4,000 | £1,000 | £15,000 |
| 4 | £4,000 | £1,000 | £20,000 |
| Total | £16,000 | £4,000 free | £20,000 |
Four years of LISA saving gets you £20,000 for a deposit — with £4,000 coming entirely from the government.
Important caveat: if you withdraw for any non-qualifying reason (not buying a first home or turning 60), you pay a 25% penalty — which takes back the bonus plus 6.25% of your own money. Don't open a LISA unless you're serious about using it for these purposes.
Shared Ownership: buying with a smaller deposit
Shared Ownership lets you buy a share — typically 25% to 75% — of a home and pay subsidised rent to a housing association on the remaining share. Key points:
- Smaller deposit needed: 5-10% of your share (not the full property price)
- Can staircase: buy more shares over time until you own 100%
- Monthly costs: mortgage payment + rent on remaining share (+ service charge if a flat)
- Restrictions: need lender and housing association consent to sell; restrictions on subletting
Example: £280,000 flat, buy 40% share
| Item | Amount |
|---|---|
| Share price | £112,000 |
| 10% deposit | £11,200 |
| Mortgage (90% of share) | £100,800 |
| Monthly mortgage (4.5%, 25yr) | £556 |
| Monthly rent (3% of 60% = £168,000 × 3%) | £420 |
| Total monthly housing cost | £976 |
Versus buying outright with 5% deposit: £1,623/month. Shared Ownership saves £647/month initially — but you don't build equity as fast and staircasing fees add up.
First Homes scheme: discounts for key workers
The First Homes scheme provides new-build homes at a 30-50% discount to qualifying buyers:
- Must be a first-time buyer
- Priority for: local residents, key workers (nurses, teachers, police, military)
- Household income cap: typically £80,000/year (£90,000 in London)
- The discount is preserved when you sell — future buyers get the same discount, keeping homes affordable
- SDLT calculated on discounted price
A £350,000 new-build at 30% discount = £245,000 — within the FTB nil-rate SDLT band and with a 10% deposit of only £24,500.
Other buying costs beyond the deposit
Many first-time buyers focus entirely on the deposit and are surprised by additional costs. Budget for:
| Cost | Typical amount |
|---|---|
| SDLT | £0-£10,000+ (see above) |
| Solicitor/conveyancer legal fees | £1,000-1,800 |
| Conveyancing searches | £300-500 |
| Land Registry fee | £295-£565 (£280k property: £270) |
| Mortgage arrangement fee | £0-£1,499 |
| Mortgage broker fee | £0-£500 |
| RICS Level 2 survey | £400-600 |
| Removals | £300-1,500 |
| Initial furnishing/white goods | £1,000-5,000 |
| Total additional costs (typical) | £3,500-£12,000 |
Budget a minimum of £3,500-5,000 in additional costs on top of your deposit, even on a relatively straightforward purchase.
The buying timeline: from AIP to completion
-
Agreement in Principle (AIP) — online application with a lender; soft credit check; takes 30-60 minutes. Valid 60-90 days.
-
Property search and offer — once AIP in hand, make offer. Accepted offers are not legally binding until exchange of contracts.
-
Full mortgage application — submit documents (P60s, payslips, bank statements, 3 months self-employed accounts). Lender instructs valuation.
-
Instruct solicitor/conveyancer — get 3 quotes. They order searches and review title deeds.
-
Survey — independently instruct a RICS surveyor. Don't rely solely on the lender's valuation.
-
Searches and enquiries — local authority, drainage, environmental searches (3-8 weeks). Solicitor raises enquiries with seller's solicitor.
-
Exchange of contracts — both sides sign and swap contracts. You pay your deposit to the solicitor. Legally binding from this point. Completion date set.
-
Completion — mortgage funds released, keys handed over. You own the property.
Typical total timeline: 8-16 weeks from accepted offer to completion. Allow longer for:
- Leasehold properties (more complex legal work)
- Chains (each party needs to be ready simultaneously)
- Older or unusual properties
- Planning queries or restrictive covenants
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- gov.uk: Stamp Duty Land Tax — first-time buyers
- gov.uk: Lifetime ISA
- gov.uk: Shared Ownership scheme
- gov.uk: First Homes scheme
- RICS: Types of survey
Frequently asked questions
How much deposit do I need to buy my first home in 2026?
The minimum deposit for a residential mortgage is typically 5% of the purchase price (95% LTV). A 10% deposit gives access to better rates, and 20%+ unlocks the best deals. On a £280,000 home that's £14,000 (5%), £28,000 (10%), or £56,000 (20%).
What are the SDLT rates for first-time buyers in 2026?
From April 2025, first-time buyer SDLT relief was reduced. The nil-rate threshold for FTBs is now £300,000 (reduced from £425,000). Properties over £300,000 but under £500,000 pay 5% on the portion above £300,000. There is no FTB relief above £500,000.
How much SDLT do I pay on a £280,000 first home?
On a £280,000 first home, you pay £0 SDLT — it falls entirely within the £300,000 FTB nil-rate threshold. On a £350,000 first home you'd pay £2,500 (5% on the £50,000 above £300,000).
Can I use a Lifetime ISA to buy my first home?
Yes. A LISA gives a 25% government bonus on up to £4,000/year — £1,000 free per year. The property must be your first home and worth £450,000 or less. You must have held the LISA for at least 12 months before using it to buy.
What is Shared Ownership and how does it work?
Shared Ownership lets you buy a share (typically 25-75%) of a new-build or resale home and pay reduced rent on the rest to a housing association. You can 'staircase' — buy more shares over time — until you own 100%.
What is the First Homes scheme?
First Homes offers new-build homes at 30-50% discount to eligible buyers — key workers, local residents, and first-time buyers who cannot afford to buy locally. The discount is permanent and passes to future buyers, keeping homes affordable in perpetuity.
How long does buying a house take in the UK?
From accepted offer to completion typically takes 8-16 weeks. The main stages are: mortgage application (1-3 weeks), survey (1-2 weeks), conveyancing searches (3-6 weeks), exchange of contracts, then completion (1-4 weeks later). Leasehold or chain transactions take longer.
How much do solicitors charge for conveyancing in 2026?
Conveyancing fees for a standard residential purchase typically run £1,000-2,000 in legal fees, plus £300-500 for searches (local authority, drainage, environmental), plus £300-600 for the Land Registry fee depending on property value.
What type of survey do I need as a first-time buyer?
A RICS Level 2 Home Survey (formerly HomeBuyer Report) costs around £400-600 and covers most standard properties. For older or unusual properties, a RICS Level 3 Building Survey (£600-1,500) gives more detailed structural analysis. Never skip a survey.
What is an Agreement in Principle (AIP) and do I need one?
An AIP (also called a Mortgage in Principle or Decision in Principle) is a conditional indication from a lender of how much they'd lend you. Estate agents often require one before accepting offers. It does a soft credit check (usually) and lasts 60-90 days.
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Related reading
Stamp Duty for First-Time Buyers April 2025: What Changed & Your New Bill
From 1 April 2025, the stamp duty nil-rate threshold for first-time buyers dropped from £425,000 to £300,000. If you are buying above £300,000, your bill has gone up — sometimes by thousands. Here is what changed, worked examples, and what it means for you.
Stamp Duty Refund on an Uninhabitable Property: How to Claim SDLT Relief
Bought a derelict or uninhabitable property? You may have overpaid SDLT. Learn how to claim non-residential rates and reclaim thousands from HMRC.
First Homes Scheme 2026: 30-50% Discount on New Builds — Who Qualifies?
The First Homes scheme offers first-time buyers a minimum 30% discount on new-build homes in England. Here's who qualifies, how SDLT works on discounted homes, and a full worked example.