Mortgage Guarantee Scheme: 5% deposits and eligibility

The UK Mortgage Guarantee Scheme has been available on a permanent basis since July 2025. It is designed to support eligible first-time buyers and home movers who are buying a home to live in with a smaller deposit. It is not a separate government mortgage application: the scheme works through participating lenders and eligible mortgage products. This guide explains the deposit range, eligibility and what the government guarantee does—and does not—mean for a borrower.

What is the Mortgage Guarantee Scheme?

The scheme is an agreement between the government and qualifying lenders. For an eligible mortgage, the government guarantee can cover part of a lender’s qualifying loss under the published rules. It is intended to help lenders offer some higher loan-to-value products, but participation and the products available are decisions for each lender.

The guarantee protects the lender, not the borrower. It does not make mortgage payments for you, guarantee approval or change your responsibility to repay the mortgage. If a property is repossessed and sold, a remaining shortfall can still be owed by the borrower; the scheme rules preserve that liability even where a guarantee payment is made to a lender. The published rules set out how a recoverable loss is calculated rather than providing a simple, universal payout amount.

The former Mortgage Guarantee Scheme accepted new mortgages until 30 June 2025. The current, permanent scheme became available from July 2025. These are separate scheme arrangements, so 2025 should not be read as an expiry date for the current scheme. You can read the current Treasury scheme publication and its published rules.

Who may be eligible?

The current rules cover mortgages with a loan-to-value ratio of more than 90% and up to 95% (90% < LTV ≤ 95%). In ordinary purchase terms, that is a deposit of 5% to below 10% of the property value.

Other key conditions include:

• a participating lender and an eligible product;
• a repayment mortgage, where payments cover capital and interest;
• a UK residential property that you will occupy as your home (subject to the rules’ service-posting exception);
• the lender’s affordability and income checks; and
• compliance with the scheme’s product and property exclusions, including the exclusion of buy-to-let, interest-only, shared ownership and shared-equity lending.

The current rules do not set a £600,000 scheme cap. That does not mean a lender will lend any amount: lenders can set their own lending and product limits, and their underwriting criteria still apply. Applying for a mortgage follows the lender’s normal process; there is no separate government application, and not every mortgage offer is an eligible scheme product.

First-time buyers and home movers can both be eligible if they meet the rules. A home mover must be buying a home to occupy, not a second or holiday home. First Homes has an explicit exception in the scheme’s publicly assisted loan definition, but First Homes is an England-only scheme with its own eligibility conditions and lender acceptance requirements. That exception does not guarantee that a combined product will be available.

How does LTV affect a mortgage?

The loan-to-value ratio compares the mortgage balance with the property value. For example, a £200,000 mortgage on a £250,000 home has an 80% LTV. A larger deposit generally means a lower LTV at the outset, while later LTV depends on both the outstanding balance and the property’s value. Capital repayments can reduce the balance, but a fall in the property’s value can offset that progress.

LTV is one factor lenders consider when pricing and assessing products, alongside affordability, income, credit history and their own criteria. A 95% LTV product may have different rates, fees and conditions from a lower-LTV product, but neither the scheme nor a lower future LTV promises a particular rate, remortgage option or lending decision. Compare the overall cost and suitability of eligible and non-scheme products before applying.

If a property has to be sold following mortgage arrears, the outcome depends on the individual circumstances, mortgage balance, sale costs and any other charges. FCA rules require a lender to market a repossessed property promptly and seek the best reasonably achievable price; they do not mean that an auction or a below-value sale is inevitable.

A simplified example shows why the numbers matter. A £200,000 loan on a £250,000 home is 80% LTV. If the balance were £160,000 and the property sold for £170,000, there could be a £10,000 surplus before repayments, interest, fees and sale costs. If the balance were £190,000, the same sale price could leave a £20,000 shortfall before those items. This is not the government’s payout calculation, and it does not determine what any borrower or lender would owe in a real case.

The previous scheme recorded 58,856 mortgage completions between 19 April 2021 and 30 June 2025, according to Treasury statistics. That historical completion count relates to the earlier scheme; it does not prove an outcome for the current scheme or guarantee a result for an individual applicant.

What should you compare before applying?

A smaller deposit can make a purchase possible sooner, but it is still important to compare the total cost of different mortgage options, including rates, fees, repayment terms and the effect of a change in property value. Consider products both within and outside the scheme, because a lender that does not use the scheme may also offer a 95% LTV mortgage.

The scheme does not guarantee approval, a particular interest rate, protection from repossession or future remortgaging terms. Check the lender’s current criteria and product information, and consider speaking to a lender or mortgage adviser about the options that fit your circumstances.