Buying your first home in London is challenging because property prices are high relative to most other UK markets. Most first-time buyer purchases in London exceed the £300,000 stamp duty nil-rate threshold, which means larger deposits, higher income requirements, and — for many buyers — some stamp duty as part of the upfront cost. This guide covers what first-time buyers in London need to know about mortgages, affordability, deposit schemes, and the costs involved. For an overview of our London mortgage services, see our London office page.
What Can You Afford in London?
Affordability is usually the central challenge for first-time buyers in London. Lenders assess how much you can borrow using a combination of your income, your outgoings, your existing credit commitments, and a full affordability review — not income alone. Some lenders will consider higher borrowing in certain circumstances, for example for some professional occupations or applicants with strong income growth, although availability and criteria vary.
At London prices, borrowing capacity can become as important as deposit size when determining budget. Understanding both figures — how much you can put down and how much you can borrow — before you start searching is important. For a detailed look at borrowing at London price points, see how much you can borrow in London.
For joint applications, two incomes are usually considered together, which can materially increase borrowing capacity. A broker can help you understand how lenders are likely to assess your circumstances and borrowing position, which is more reliable than an online calculator.
How Much Deposit Do You Need?
Some lenders will consider a 5% deposit for first-time buyers, subject to criteria, affordability, and property type, although product choice is more limited at 95% LTV. A deposit of 10% or more can provide access to a wider range of lenders and often improves the rates available, although availability varies.
In London, where prices are high, saving for a deposit takes longer and family support is a common feature of first-time buyer purchases. In cash terms, even a 10% deposit on a typical London first-time buyer property represents a significant sum. For worked examples at London price points, see our London deposit guide.
Ways to Build or Boost Your Deposit
Lifetime ISA
A Lifetime ISA lets you save up to £4,000 per tax year towards your first home, with the government adding a 25% bonus. The account must have been open for at least 12 months before it can be used towards a qualifying purchase. The property price limit is £450,000 (confirm current rules on GOV.UK).
In London, the £450,000 cap is a significant restriction. Many first-time buyer properties in inner and mid-London exceed £450,000, which means the LISA cannot be used for those purchases. If you withdraw the funds for any other purpose, a 25% withdrawal penalty applies, which effectively means losing the government bonus and part of your own savings. Buyers targeting London properties above £450,000 should check the rules carefully before adopting a LISA as their main savings route.
Family Support
Given the deposit amounts required in London, family support is a common feature of first-time buyer purchases. Options include gifted deposits, where a family member provides all or part of the deposit as a gift, and family support mortgage products, where a family member’s savings or equity may be used to help. Availability and criteria vary by lender. A broker can help explain which options may be available for your circumstances.
Shared Ownership
Shared Ownership lets you buy a share of a property (typically between 10% and 75%, depending on the scheme and provider) and pay rent on the remainder. This reduces the deposit needed, since you pay a percentage of the share you are buying. In London, Shared Ownership operates under a household income cap of £90,000, compared with £80,000 elsewhere in England (GOV.UK). There is Shared Ownership stock across the capital through registered housing providers. For more detail, see our London shared ownership guide.
First Homes and Other Schemes
The First Homes scheme offers eligible first-time buyers a discount on the market price of certain new-build homes. In Greater London, the scheme has operated with a household income cap of £90,000 and a cap on the discounted purchase price. Scheme details, eligibility, and availability vary by location and over time, and not all developments participate, so the current position should be checked on GOV.UK and with the relevant developer or local authority.
Some London-specific intermediate housing providers also build and sell homes at a discount to market value for eligible working Londoners, with their own eligibility criteria. The Help to Buy equity loan scheme closed to new applicants in 2023 and is no longer available for new purchases. Because schemes change over time, it is worth confirming what is currently available before relying on any of them.
Stamp Duty for First-Time Buyers in London
First-time buyers pay no Stamp Duty Land Tax (SDLT) on properties up to £300,000. On properties between £300,001 and £500,000, you pay 5% on the portion above £300,000. Properties above £500,000 do not qualify for first-time buyer relief — you pay standard rates on the full purchase price.
In London, many first-time buyer purchases exceed the £300,000 nil-rate threshold, so budgeting for SDLT from the start is important. As an illustration, on an eligible first-time buyer purchase at £450,000, SDLT would be £7,500 (5% of the £150,000 above £300,000), based on current rates. This should be budgeted for alongside your deposit, not instead of it. Note that some online guides still show the old temporary £425,000 first-time buyer threshold, which ended on 31 March 2025; the current threshold is £300,000. For worked examples, see our London stamp duty guide.
Where Can First-Time Buyers Buy in London?
London is 33 boroughs with very different price levels, from more accessible outer boroughs to premium central areas. For first-time buyers focused on budget, the outer boroughs and improving areas generally offer the lowest entry prices, and Shared Ownership extends options across a wider range of locations. Rather than repeat a full area breakdown here, our London area guide covers the main residential areas by buyer type, including the most accessible areas for first-time buyers. See our London area guide.
The First-Time Buyer Process: Step by Step
1. Check your credit report. Review it with Equifax, Experian, and TransUnion at least three months before applying. Address any errors or issues early.
2. Understand your budget. Use a broker to get a realistic borrowing figure based on your income, outgoings, and deposit. This is more reliable than online calculators.
3. Get an Agreement in Principle. A conditional indication from a lender of how much they would lend, based on basic financial information and a credit check. In London’s competitive market, it shows agents and sellers you are a credible, prepared buyer.
4. Find a property and make an offer. Once your Agreement in Principle is in place, you can search with confidence and move quickly when you find the right property.
5. Instruct a solicitor. You will need a conveyancer for the legal work. Instruct one as soon as your offer is accepted to avoid delays — particularly important for leasehold flats, which make up much of the London first-time buyer market and involve additional enquiries.
6. Submit your full mortgage application. Your broker submits the full application. The lender carries out an affordability assessment, credit check, and property valuation.
7. Receive your mortgage offer. If the lender is satisfied, a formal offer is issued.
8. Exchange and complete. Your solicitor handles exchange of contracts and completion. On completion day, you get the keys.
Costs Beyond the Deposit
Your deposit is not the only upfront cost. Budget for the following.
Stamp Duty Land Tax. Depends on price and whether you qualify for first-time buyer relief. See our stamp duty guide.
Solicitor fees. These vary, including disbursements such as searches and Land Registry fees. Leasehold transactions — common in London — are often more involved than freehold.
Survey. Cost depends on the property and level of survey. For a London flat in a building with potential cladding or structural questions, a survey is particularly worthwhile.
Mortgage arrangement fee. Some products carry a fee, which can often be added to the loan.
Broker fee. If applicable, we will confirm this before you commit to proceeding.
Ongoing leasehold costs. For leasehold flats, service charge and ground rent are ongoing annual costs that should be factored into affordability from the start.
Moving costs. Removals, utility connections, and any immediate work on the property.
Common Mistakes First-Time Buyers Make
Not checking your credit report early enough. Errors or missed payments you did not know about can delay or derail an application. Check at least three months before you plan to apply.
Underestimating the total cost of buying. The deposit is the largest cost, but stamp duty, legal fees, survey costs, leasehold charges, and moving expenses add up. At London prices, where many first-time buyers need to budget for SDLT, this is especially important to get right.
Searching before knowing your budget. Without an Agreement in Principle, you risk falling in love with a property you cannot afford, or losing out to buyers who can demonstrate they are ready to proceed.
Applying to the wrong lender. Different lenders have different criteria. A broker can match you with lenders whose affordability model, income assessment, and product range suit your circumstances.
Overlooking leasehold considerations. Many London first-time buyer properties are leasehold flats. Lease length, ground rent, service charge, and cladding status can all affect mortgage availability. For more, see our London leasehold guide.
Why We Wrote This Guide
Fitch & Fitch is an independent, whole-of-market mortgage broker with offices in Canary Wharf, Cambridge, and Colchester. We are an appointed representative of JLM Mortgage Network, authorised and regulated by the Financial Conduct Authority (FCA Registration Numbers 955014 and 300629). You can verify this on the FCA Register at register.fca.org.uk.
Fitch & Fitch has received recognition from independent industry bodies including the Mortgage Strategy Awards, Mortgage Introducer Awards, and Legal & General Mortgage Club Awards. These awards are judged independently and can be verified on the respective awards websites.
We wrote this guide because we believe an informed buyer makes better decisions. For further information about our London mortgage services, visit our London hub page.
Frequently Asked Questions
How much do I need to earn to buy a house in London?
This depends on the price you are targeting, your deposit, your outgoings, and the lender’s full affordability assessment. London prices are high relative to most UK markets, so first-time buyers often need a higher income than in other regions, and joint applications (where two incomes are considered together) are common. Rather than rely on a single rule of thumb, a broker can give you a realistic figure for your circumstances. For more, see how much can you borrow guide.
How much deposit do I need to buy a house as a first-time buyer in London?
Some lenders consider a 5% deposit, subject to criteria, though product choice is more limited at 95% LTV and a 10% deposit can provide access to a wider range of options, although availability varies by lender and circumstances. In London, even a 5–10% deposit represents a significant sum in cash terms because of high property prices. For worked examples, see our deposit guide.
Do first-time buyers pay stamp duty in London?
Many do. First-time buyers pay no SDLT on properties up to £300,000 and 5% on the portion between £300,001 and £500,000, losing relief entirely above £500,000. As many London first-time buyer purchases exceed £300,000, most pay some stamp duty. For worked examples, see our SDLT guide.
What is an Agreement in Principle?
An Agreement in Principle is a conditional indication from a lender of how much they would be willing to lend, based on basic financial information and a credit check. It is not a guarantee of a mortgage offer, but it shows estate agents and sellers that you are a credible buyer who has done the preparation — which matters in London’s competitive market.
Can I buy in London with a 5% deposit?
Some lenders will consider a 5% deposit for first-time buyers, subject to criteria, affordability, and property type. Product choice is more limited at 95% LTV, and a 10% deposit can provide access to a wider range of lenders and products, although availability varies. At London prices, affordability is often the binding constraint, so it is worth understanding your borrowing capacity alongside your deposit.
Is Shared Ownership available in London?
Yes. There is Shared Ownership stock across London through registered housing providers. Eligibility criteria apply, including a household income cap of £90,000 in London. The scheme lets you buy a share of a property and pay rent on the remainder, reducing the deposit and mortgage required. For more, see our shared ownership guide.
What is the First Homes scheme in London?
The First Homes scheme offers eligible first-time buyers a discount on the market price of certain new-build homes, subject to eligibility criteria including a household income cap and a cap on the discounted purchase price, which in Greater London have been set at specific levels. Scheme availability and criteria vary by location and over time, and not all developments participate, so check the current position on GOV.UK and with the developer.
Should I use a mortgage broker as a first-time buyer?
A broker can search across a wide range of lenders, including some whose products are not shown on comparison sites or available directly. They can also match your application to lenders whose criteria suit your circumstances, which can affect the borrowing figure, product choice, and rate available. For more on how brokers work, see what is a mortgage broker guide.
Next Steps
If you are a first-time buyer looking to purchase in London, a useful first step can be understanding what you can borrow and what the total cost of buying will look like before you start your property search.
For further information about our London mortgage services, visit our London hub page.
Related Guides
How Much Can I Borrow for a Mortgage in London?
How Much Deposit Do You Need to Buy in London?
Best Areas to Buy Property in London
The information above is for general guidance only and does not take account of your personal circumstances. Stamp duty figures are based on HMRC published rates effective 1 April 2025 (GOV.UK).