First-Time Buyer in London 2026: How to Buy with a 5% Deposit
London prices are 5x the national average — yet thousands of first-time buyers complete here every month. With a 5% deposit, the right scheme, and a broker who knows the lender quirks, owning a London home is more achievable than headlines suggest.
Average London prices in 2026
The average London property is around £530,000, but FTB averages are closer to £450,000 once you exclude prime central locations. With a 5% deposit (£22,500) and the right 95% LTV product, you'll need a borrowing capacity of c.£427,500 — typically 4.5–5x household income.
Schemes worth knowing
- First Homes: 30–50% discount on selected new-builds for FTBs in London earning under £90k.
- Lifetime ISA: 25% government bonus on up to £4,000/year toward your deposit.
- Shared Ownership: Buy 25–75% of a property and pay rent on the rest.
- 95% LTV mortgage guarantee scheme: 14 lenders currently offering 95% LTV in London.
The 5-step London FTB process
- Get an Agreement in Principle (AIP). Multiple soft-search AIPs do not affect your credit score. Aim for 2–3.
- Set realistic budgets. Stamp Duty for FTBs is 0% up to £425,000, and 5% on the portion £425k–£625k.
- Get a solicitor lined up early. London leasehold conveyancing can take 12–16 weeks.
- Make your offer with proof of funds. Estate agents in zones 2–4 expect to see your AIP.
- Lock the rate. 5-year fixes around 4.2–4.7% are typical for 95% LTV in early 2026.
Common London FTB pitfalls
Watch for short-lease leasehold flats (under 80 years), high service charges (£300/month+ flags), cladding/EWS1 paperwork on flats above the 4th floor, and shared ownership eligibility caps. A specialist broker will spot these in advance.
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