What deposit is typical for a Buy-to-Let mortgage?

25% deposit (75% LTV) is common; some routes allow 20% with stronger profiles.

Is the deposit different for SPV limited companies?

Bands are similar; underwriting varies with directors’ guarantees and company set-up.

Do HMOs and MUFBs need larger deposits?

Often yes; lenders usually restrict maximum LTV or require higher rent coverage.

Can I use equity from my home as the deposit?

Yes, via remortgage or further advance; consider rates, fees and timescales.

How does a bigger deposit change the rate?

Lower LTVs generally mean lower rates and easier stress tests.

What if I’m a first-time landlord?

Possible with many lenders; deposit and ICR requirements still apply.

Are new-build flats allowed at higher LTVs?

Often capped lower than second-hand property; check lease/EWS1 where relevant.

Can I combine deposit from savings and a gift?

Yes, subject to source-of-funds evidence and lender policy.

Do product fees affect effective LTV?

Fees added to the loan can raise the true LTV; model total borrowing.

What else affects affordability beyond deposit?

Rental income, stress rate, term, tax band, and property type all matter.

How Much Deposit Do You Need for a Buy-to-Let Mortgage?

Discover how much deposit you need for a buy-to-let mortgage in the UK. Learn about 20%, 25%, and 40% deposit options, LTV rules, rental income requirements, and lender criteria with Mortgage Knight.

If you’re thinking about buying an investment property, one of the first questions is: how much deposit do you need for a buy-to-let mortgage in the UK?

Unlike standard residential mortgages, buy-to-let loans usually come with higher deposit requirements, reflecting the additional risk lenders take on when financing rental property. Understanding these deposit levels — and how they impact your choice of lender, mortgage rates, and long-term return on investment — is crucial before making a move.

Typical Buy-to-Let Deposit Requirements

Most UK lenders expect a deposit of 25%, meaning you’ll need to cover at least a quarter of the property’s purchase price yourself. This equates to a 75% loan-to-value (LTV) ratio.

20% deposit (80% LTV): Rare and usually comes with higher interest rates, stricter rental income tests, and limited lender choice.

25% deposit (75% LTV): The most common option for buy-to-let mortgages, widely accepted across high street and specialist lenders.

30–40% deposit (60–70% LTV): Stronger equity positions often unlock cheaper interest rates, lower monthly repayments, and greater long-term flexibility.

Specialist properties: Houses in multiple occupation (HMOs), holiday lets, or flats above shops often require 35–40% deposits.

Why a Bigger Deposit Matters

The size of your deposit influences more than just lender approval:

Access to better rates: Lower LTV = more competitive mortgage deals.

Lower monthly repayments: Reduced borrowing means smaller repayments and healthier rental profit.

Stronger remortgage options: With more equity, you’ll find it easier to refinance in the future.

Protection against downturns: A bigger deposit cushions you against property market dips or void rental periods.

Rental Income and Stress Tests

In addition to your deposit, lenders will check your rental income to ensure it comfortably covers your mortgage. This is measured through the Interest Coverage Ratio (ICR).

For basic-rate taxpayers, rental income must usually be at least 125% of the mortgage payment.
For higher-rate taxpayers, HMOs, or holiday lets, it can rise to 145% or more.

This means if your rental income is too low, even with a 25% deposit, you may need to increase your deposit to reduce the loan size and pass affordability checks.

Factors That Affect Buy-to-Let Deposit Levels

Experience – First-time landlords may need a bigger deposit (30–35%) compared to experienced investors.

Property type – Standard single lets are usually fine with 25%, while HMOs and short-term lets demand more.

Credit profile – Adverse credit history may push deposit requirements higher.

Income type – Some lenders need proof of personal income alongside rental income, especially if you’re self-employed.

Case Studies

Case Study 1 – First Buy-to-Let Investment

Emma purchased her first buy-to-let for £180,000. She provided a 25% deposit (£45,000) and secured a mainstream high street lender mortgage. The property’s rent of £825 met the lender’s 125% affordability test comfortably.

Case Study 2 – Low Deposit Challenge

David aimed to buy with just a 20% deposit (£40,000) on a £200,000 property. The limited lenders offering 80% LTV buy-to-let mortgages quoted higher interest rates, and his rental income failed the stress test. He increased his deposit to 25% and unlocked a far more affordable deal.

Case Study 3 – High Deposit Advantage

Rina invested 40% (£80,000) into her £200,000 buy-to-let. Her 60% LTV mortgage came with one of the lowest available interest rates, giving her much stronger monthly cash flow and the ability to plan for further portfolio expansion.

FAQs

Q: What is the minimum deposit for a buy-to-let mortgage in the UK?

Ans: Typically, 25%. Some lenders may consider 20%, but these are rare.

Q: Can I get a buy-to-let mortgage with 15% deposit?

Ans: Not realistically. Most lenders won’t go below 20%, and those that do will charge very high rates.

Q: Do I need a bigger deposit if I’m a first-time landlord?

Ans: Yes, often around 30–35%, unless you have a strong personal income and credit history.

Q: What deposit is required for an HMO mortgage?

Ans: Usually 30–40%, depending on lender and property type.

Q: Does a bigger deposit always mean better rates?

Ans: Yes — the lower your LTV, the more competitive your interest rates will be.

Ready to invest in property?

At Mortgage Knight, we have extensive knowledge of which lenders accept 20%, 25%, or higher deposits, and which buy-to-let deals will suit your rental goals. Whether you’re a first-time landlord or building a portfolio, we’ll help you secure the right mortgage at the right rate. Contact us today to get started.