Buying your first home is, for most people, the single largest financial commitment they will ever make — and it can feel overwhelming for that reason. Yet the process is far more predictable than it first appears. Beneath the jargon and the paperwork sit a handful of decisions that matter: how much deposit to save, what kind of mortgage fits your circumstances, what government help you are entitled to, and how to budget for all the costs that come alongside the price of the house itself.
This guide walks through those steps in a sensible order, using realistic figures. It is aimed primarily at UK buyers, but it also covers the equivalent rules and schemes in the US and Canada, since the fundamentals of saving, borrowing and buying are shared across all three. None of this is financial advice — your own lender and advisers are the ones who can turn a general picture into a tailored plan — but it will leave you knowing what to expect at every stage.
Step 1: Save for your deposit
Your deposit is the lump sum you pay upfront. The more you can put down, the less you borrow and, typically, the better the mortgage rate you will be offered.
How much do you need?
| Country | Minimum Deposit | Recommended Deposit | Best Rates At |
|---|---|---|---|
| UK | 5% of property value | 10-15% | 25%+ |
| US | 3% (conventional) | 20% | 20% (avoids PMI) |
| Canada | 5% of first $500K | 20% | 20%+ |
Real example: a £250,000 home
| Deposit % | Amount | Mortgage Needed | Typical Rate | Monthly Payment (25yr) |
|---|---|---|---|---|
| 5% | £12,500 | £237,500 | 5.2% | £1,410 |
| 10% | £25,000 | £225,000 | 4.8% | £1,290 |
| 15% | £37,500 | £212,500 | 4.5% | £1,180 |
| 25% | £62,500 | £187,500 | 4.1% | £1,000 |
Notice how the rate improves as the loan-to-value falls. The difference between a 5% and a 25% deposit on this example is roughly £410 a month, which illustrates why saving a little longer can be worthwhile.
Many first-time buyers never save the whole deposit themselves. A gifted deposit from family — sometimes half-jokingly called the ‘bank of mum and dad’ — is very common in the UK, and lenders treat it differently from money you have built up on your own. You will typically need a signed letter confirming the money is a gift rather than a loan, because the lender needs to be sure nobody else has a claim on the property. If this is your situation, mention it to your lender or broker early rather than discovering the paperwork requirement at the last minute.
How long will it take to save?
Assuming you save £500 per month:
- 5% deposit (£12,500): 25 months (just over 2 years)
- 10% deposit (£25,000): 50 months (just over 4 years)
- 15% deposit (£37,500): 75 months (just over 6 years)
Those figures assume a steady saving rate; increasing or decreasing the monthly amount simply scales the timeline accordingly.
Step 2: Understand mortgage types
The type of mortgage you choose shapes your monthly budget and the risk you carry, so it is worth getting comfortable with the main options.
Fixed-rate mortgage
Your interest rate stays the same for a set period, usually 2, 3 or 5 years, so your monthly payment never changes during that term.
- Best for: Budgeting certainty, and first-time buyers who want predictable payments
- Example: Halifax offers a 5-year fixed rate at 4.3% for 75% LTV (loan-to-value) — the rate you are offered will vary with the market
Variable-rate mortgage
Your rate can rise or fall at any time, usually in step with the Bank of England base rate.
- Best for: People who can absorb payment increases and want potentially lower rates
- Example: Nationwide offers a variable rate at 5.0% (base rate + 0.25%)
Tracker-rate mortgage
A type of variable rate that directly tracks a benchmark — such as the Bank of England base rate — plus a fixed margin.
- Example: HSBC tracker at base rate + 0.99% = currently 5.24%
How much can you borrow?
Most UK lenders will offer somewhere in the region of 4 to 4.5 times your annual income — sometimes more on larger deposits or for higher earners, sometimes less in tighter markets. Two applicants borrowing together can generally count both incomes, which is one reason couples find it noticeably easier to get on the ladder. A realistic rule of thumb is to multiply your combined gross income by 4 to 4.5 and treat that as a rough budget ceiling, then check it against your committed outgoings before you get too attached to any particular property.
Step 3: Get a mortgage Agreement in Principle
Before you start house hunting, it is worth getting an Agreement in Principle (AIP) — called a pre-approval in the US and Canada. This is a conditional offer from a lender showing roughly how much they will lend you, and it helps sellers take your offer seriously.
What you will need
- Last 3 months of bank statements
- Last 3 months of payslips (or 2 years of tax returns if self-employed)
- Proof of ID and address
- Details of any debts
Where to get an AIP
- UK: Halifax, Nationwide, Barclays, Santander, or use a mortgage broker
- US: Chase, Wells Fargo, Bank of America, or a mortgage broker
- Canada: TD, RBC, BMO, Scotiabank, or a mortgage broker
An AIP is not a guarantee of a mortgage — it is a decision in principle based on what you tell the lender. Most lenders run only a soft credit check at this stage, so shopping around a few before you commit is a common route to a better deal; the full credit check and underwriting happen when you formally apply after an offer on a property has been accepted.
Step 4: Budget for the extra costs
The deposit is not the only cost. The following are the main additional expenses to plan for, and they differ depending on where you buy.
UK — Stamp Duty Land Tax (SDLT)
| Property Price | Stamp Duty |
|---|---|
| Up to £250,000 | £0 (first-time buyers) |
| £250,001 to £425,000 | 5% |
| £425,001 to £625,000 | 10% |
First-time buyers pay no stamp duty on the first £425,000 if the property costs up to £625,000. That exemption is one of the most valuable of the UK schemes, and worth bearing in mind when deciding how much to spend.
US — closing costs
| Cost | Typical Amount |
|---|---|
| Loan origination fee | 0.5-1% of loan |
| Appraisal fee | $300-$500 |
| Title insurance | 0.5-1% of property |
| Attorney fees | $500-$1,500 |
| Home inspection | $300-$500 |
| Total closing costs | 2-5% of purchase price |
On a $300,000 home, expect $6,000 to $15,000 in closing costs on top of your deposit.
Canada — land transfer tax
| Property Price | Ontario Rate | Toronto (extra) |
|---|---|---|
| Up to $55,000 | 0.5% | 0.5% |
| $55,001 to $250,000 | 1.0% | 1.0% |
| $250,001 to $400,000 | 1.5% | 2.0% |
| $400,001 to $2,000,000 | 2.0% | 2.5% |
First-time buyers in Ontario can claim a rebate of up to $4,000.
It is also worth remembering that the purchase price is not the end of the story. Once you move in, monthly bills arrive on a schedule of their own: council tax, energy, water, buildings insurance and, if you buy a flat, a service charge. Budgeting for these on top of the mortgage — plus a maintenance pot for the repairs every home eventually needs — is a prudent habit, and building an emergency fund before completion means a broken boiler is a nuisance rather than a crisis. Costs vary enormously by area and property type, but planning on the pessimistic side rarely feels like a mistake.
Step 5: Apply for government schemes
Across the UK, US and Canada there are schemes designed specifically to help first-time buyers, and they are worth checking before you commit to a purchase.
UK — Lifetime ISA (LISA)
- Save up to £4,000 per year
- Government adds a 25% bonus (up to £1,000 per year)
- Must be aged 18-39 to open
- Can be used for a property up to £450,000
- Providers include Moneybox, Skipton and AJ Bell
UK — First Homes Scheme
- New-build homes at 30-50% below market value
- Reserved for first-time buyers earning under £80,000 (or £90,000 in London)
US — FHA loans
- Minimum 3.5% down payment
- Credit score as low as 580
- Government-backed (lower risk for lenders)
- Monthly mortgage insurance required
- Offered by most lenders including Chase and Wells Fargo
US — First-time home buyer tax credit
- Up to $10,000 credit (varies by state)
- Some states offer down payment assistance programmes
Canada — First-Time Home Buyer Incentive
- Government shares up to 10% of property value as an equity stake
- Reduces your mortgage amount and monthly payments
- Available through CMHC
Canada — FHSA (First Home Savings Account)
- Save up to $8,000 per year (lifetime limit $40,000)
- Tax-deductible contributions and tax-free withdrawals for a home purchase
- Available at most Canadian banks
Step 6: Understand the buying process
The timeline differs by country, but the shape of it is broadly similar.
UK timeline
- Get an AIP: 1-3 days
- Find a property: varies (weeks to months)
- Make an offer: negotiate with the seller
- Apply for a mortgage: 2-6 weeks
- Survey and valuation: 1-2 weeks
- Exchange contracts: your solicitor handles this
- Completion: you get the keys
Total timeline: around 12-16 weeks on average.
One UK feature worth knowing about is ‘sold subject to contract’. Until contracts are formally exchanged, either buyer or seller can technically pull out, which means an accepted offer is not the same as a binding deal. This works in your favour as a buyer — you are not locked in if a survey reveals serious problems — but it also means you could lose a property even after a verbal agreement. A good estate agent and solicitor keep things moving, but building a little uncertainty into your expected timings is realistic.
US timeline
- Get pre-approved: 1-3 days
- Find a property: varies
- Make an offer: include earnest money deposit (1-3%)
- Home inspection: 1-2 weeks
- Appraisal: 1-2 weeks
- Underwriting: 2-4 weeks
- Closing: sign documents and get keys
Total timeline: around 30-60 days on average.
Step 7: Tips for first-time buyers
A few habits make the whole journey smoother:
- Get your credit score in shape: check your report about 6 months before applying and fix any errors.
- Do not change jobs: lenders prefer stable employment for at least 2 years.
- Avoid big purchases: do not buy a car or furniture on credit before completing.
- Use a mortgage broker: they can often access deals you will not find directly.
- Budget for the unexpected: keep an emergency fund after you move in.
- Do not overstretch: just because a lender offers you a large sum does not mean you should spend all of it.
A closing thought
Buying a first home is a marathon rather than a sprint. The essentials are straightforward to hold on to: save a realistic deposit, choose a mortgage type that suits your budget and appetite for risk, budget for the costs on top of the purchase price, and claim whatever government help you qualify for. Sort your paperwork and your borrowing position early, and the process becomes far calmer. Start preparing sooner rather than later, and the keys will follow.