The Mortgage Guarantee Scheme: buying with a 5% deposit

By Sam Kane · Last checked 9 October 2026

The Mortgage Guarantee Scheme is a government scheme that helps banks and building societies offer mortgages to people with a deposit of 5% to 9.99% of the price. It has been permanent since July 2025 and covers the whole UK. You do not apply to the government. You apply to a lender in the normal way, and the lender still checks your income and your credit file.

The short version

What is the Mortgage Guarantee Scheme?

When you borrow 95% of a home’s price, the lender takes a bigger risk. If you could not pay and the home had to be sold for less than you owe, the lender would lose money.

Under the scheme, the government agrees to cover part of that loss on mortgages where the deposit is small. Lenders pay a fee for this cover. Because their risk is lower, lenders are more willing to offer 95% mortgages, even when the economy is shaky.

Before the 2024 general election, the Labour Party promised a permanent mortgage guarantee scheme, and it was often called “Freedom to Buy”. The scheme the government launched in July 2025 is officially called the 2025 Mortgage Guarantee Scheme.

The cover is for the lender, not for you. If you cannot keep up your payments, you still owe the debt, and your home could be repossessed.

Who can use the Mortgage Guarantee Scheme?

The scheme rules, published by HM Treasury, say a mortgage can only be part of the scheme if:

Rule What it means for you
The loan is 91% to 95% of the price Your deposit is at least 5% but less than 10%
It is a repayment mortgage Each payment pays off some of the loan, not only the interest
You will live in the home It cannot be a buy-to-let mortgage
The home is in the UK England, Scotland, Wales and Northern Ireland all count
You own the whole home Shared ownership and shared equity homes are not included
No guarantor mortgages Mortgages backed by a guarantor are usually not included
The lender has checked you can afford it Including a test of whether you could pay if rates rise
You are not “credit-impaired” See the next section

The scheme has no top price for the home. Each lender sets its own limits. The old 2021 scheme had a £600,000 cap, so older guides may still mention it.

You can be a first-time buyer or someone moving home. HM Treasury’s figures for the old scheme show that 86% of the mortgages it supported, from April 2021 to June 2025, went to first-time buyers.

What does “credit-impaired” mean?

This is where your credit file matters most. The scheme rules say the lender must check that you are not credit-impaired. In short, you may be counted as credit-impaired if, in the time before you buy:

The rules have some exceptions, for example when a bank’s mistake caused a late payment. A lender will check all of this using your credit file. Our guide to the credit score you need for a mortgage explains what else lenders look at.

Which lenders take part?

On 8 October 2026, GOV.UK did not publish a list of lenders on the scheme, and lenders do not always say which of their mortgages use it. The simplest way to find a 95% mortgage is to compare them on a comparison site or a lender’s website, or to ask a mortgage broker. A broker can also tell you which lenders accept your kind of income and credit history.

How do you get a mortgage through the scheme?

  1. Save at least 5% of the price, plus money for the costs of buying such as the solicitor and survey. Our guide to how much deposit you need for a house has the sums.
  2. Check your credit file with Experian, Equifax and TransUnion. Fix mistakes, such as an old address. If your file is thin, Report My Rent can add your rent payments to your Experian, Equifax and TransUnion credit files each month.
  3. Get a mortgage in principle. This is a lender’s first view of how much it could lend you.
  4. Compare 95% mortgages, or ask a broker to do it.
  5. Apply to the lender. The lender decides whether the mortgage goes into the scheme. You do not need to do anything extra.

Is a 95% mortgage a good idea?

It can get you into a home years sooner. But there are trade-offs:

If you have no deposit at all, read our guide to the 100% mortgage. If you want a new-build home, note that the Deposit Unlock scheme closed to new buyers in April 2026, so a 95% mortgage on a new build now usually means a normal lender’s product, which may fall under this scheme. In England, the First Homes scheme can cut the price of a new build, though few are now available. For the full path from renting to owning, read our guide on going from renter to first-time buyer.

Common questions

Is the Mortgage Guarantee Scheme the same as Help to Buy?

No. The Help to Buy equity loan lent you part of the price. The Mortgage Guarantee Scheme lends you nothing. It only gives lenders cover, so they offer more 95% mortgages.

Is the scheme only for first-time buyers?

No. Home movers can use it too. Most people who used the old scheme were first-time buyers.

Can I use it with a Lifetime ISA?

Yes, you can use Lifetime ISA savings towards your deposit, as long as you meet the Lifetime ISA rules, including the £450,000 price limit. The scheme rules say a deposit from a Lifetime ISA does not stop a mortgage being part of the scheme.

Can I use it for a new-build home?

The scheme rules cover UK homes in general and do not exclude new builds. Some lenders have stricter rules for new builds and flats, so ask the lender.

Does the lender still check my credit file?

Yes. The scheme changes what lenders can offer, not how they check you. The lender reads your Experian, Equifax or TransUnion file as usual.

Sources

This guide is general information, not financial advice. A mortgage is a loan secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

You already do the hard part.

You pay your rent every month. From now on, your credit file can show it.

a month