If you are considering becoming a landlord, one of the first questions you may have is how much deposit is required for a buy-to-let mortgage. The deposit size plays a big role in your borrowing options, the type of property you can purchase, and the level of rental income you may generate.
Typical buy-to-let deposit requirements
For most buy-to-let mortgages, lenders usually ask for a deposit of at least 25% of the property’s value. Some may accept slightly less, for example 20%, but in many cases a higher deposit can give you access to more competitive interest rates. A 40% deposit or could open up a wider choice of products.
Why do buy-to-let deposits tend to be higher?
Buy-to-let lending is considered higher risk than standard residential lending because repayments often rely on rental income rather than the borrower’s salary. By asking for a larger deposit, lenders reduce their risk and ensure the mortgage is more sustainable.
Factors that may affect the deposit you need
The deposit size can vary depending on:
- Your credit history: stronger credit records may give you access to lower deposit requirements.
- The type of property: new-builds, flats above commercial premises, or HMOs (houses in multiple occupation) may require higher deposits.
- Rental income forecasts: lenders typically assess whether the expected rent comfortably covers the mortgage, often with a margin built in.
- Market conditions: in times of economic uncertainty, lenders may increase minimum deposit thresholds.
Planning your buy-to-let purchase
If you are working out how much you need to save, it helps to consider your investment goals. A higher deposit can mean better rates, lower monthly repayments, and more potential profit from rental income. On the other hand, tying up more cash in the property may reduce your flexibility. A mortgage broker can help you find the most suitable buy-to-let mortgage for your circumstances and guide you through the application process.
Should you save for a larger deposit?
Saving for a larger deposit may take more time, but it could improve your long-term returns by lowering your borrowing costs. The right balance will depend on your finances, the property market, and your strategy as a landlord. For more on what’s involved in investing, see our guide to buy-to-let explained, which covers the key things landlords need to know.
How much deposit do you need for a buy-to-let?
While requirements vary, aiming for at least 25% is a good starting point. Speaking to a mortgage broker can help you understand what options are available and whether saving for a larger deposit would benefit your overall investment plans.
