Can You Buy a Home in Birmingham With a 5% Deposit?

For many first-time buyers, saving for a deposit is one of the biggest hurdles to getting onto the property ladder.

With house prices across Birmingham, Bromsgrove, Redditch and the surrounding areas varying significantly, many buyers assume they need a large deposit before they can even start looking for a home. However, that is not always the case.

Many lenders continue to offer mortgages that require a deposit of just 5%, making homeownership more accessible for buyers who may not have had the opportunity to save a larger amount.

So, can you buy a home in Birmingham with a 5% deposit? The answer is yes, but there are a few important things to understand first.

What Does a 5% Deposit Mean?

When buying a property, your deposit is the amount you contribute towards the purchase price.

A 5% deposit means you provide 5% of the property's value and borrow the remaining 95% through a mortgage.

For example:

This type of mortgage is often referred to as a 95% loan-to-value (LTV) mortgage.

Are 5% Deposit Mortgages Still Available?

Yes.

Many lenders continue to offer 95% mortgages to eligible buyers.

In July 2025, the government introduced a permanent Mortgage Guarantee Scheme designed to support the continued availability of these products.

The scheme provides participating lenders with a government-backed guarantee on a portion of qualifying mortgages, helping to encourage the availability of mortgages for buyers with deposits between 5% and 9%.

Importantly, the scheme is available to both first-time buyers and home movers across the UK.

However, while the scheme supports lenders, buyers must still pass affordability checks and meet the lender's criteria.

How Much Could You Borrow?

Your deposit is only one part of the equation.

Lenders will also consider:

• Your income
• Employment status
• Existing financial commitments
• Credit history
• Household expenditure
• Overall affordability

For example, having a £15,000 deposit does not automatically mean you can buy a £300,000 property. You will still need to demonstrate that you can afford the mortgage required for the remaining balance.

This is why understanding your borrowing potential before you begin viewing properties is so important.

What Areas Could a 5% Deposit Buy In?

The answer depends on your income, affordability and the type of property you are looking for.

Across Birmingham and the surrounding areas, buyers with smaller deposits may find opportunities in locations such as:

• Northfield
• Longbridge
• Kings Norton
• Rubery
• Redditch
• Bromsgrove
• Shirley
• Parts of Selly Oak

As property prices vary between areas, speaking to a mortgage adviser before beginning your search can help you identify realistic options and avoid wasting time viewing homes outside your budget.

What Other Costs Should You Budget For?

One common misconception is that the deposit is the only upfront cost involved in buying a property.

In reality, buyers should also budget for:

• Solicitor or conveyancing fees
• Property surveys
• Mortgage arrangement fees (where applicable)
• Removal costs
• Buildings insurance
• Furnishing and moving expenses

Having additional savings available can help make the buying process far less stressful.

Are There Any Drawbacks to a 5% Deposit Mortgage?

A smaller deposit can help buyers get onto the property ladder sooner, but it is important to understand the trade-offs.

Because you are borrowing a larger percentage of the property's value, lenders may view the mortgage as carrying greater risk.

As a result:

• Interest rates may be higher than mortgages with larger deposits
• Monthly repayments may be higher
• There may be fewer mortgage products available
• There is a greater risk of negative equity if property values fall

For many buyers, however, the ability to purchase sooner outweighs these considerations, particularly if property prices continue to rise while they are saving.

Are There Any Other Ways to Buy With a Smaller Deposit?

Depending on your circumstances, there may be other options available.

These can include:

First Homes Scheme

The First Homes Scheme allows eligible first-time buyers to purchase selected new-build properties at a discounted price, helping reduce the amount required for both the deposit and mortgage.

Shared Ownership

Shared Ownership allows buyers to purchase a share of a property and pay rent on the remaining share, often reducing the initial deposit needed.

Developer Incentives

Some developers offer schemes and incentives designed to support buyers purchasing new-build homes with smaller deposits.

The availability of these schemes varies, so it is worth seeking professional advice before making a decision.

Speak to a Mortgage Adviser Before You Start Viewing

Before you begin arranging viewings, it is worth speaking to a mortgage adviser to understand exactly how much you may be able to borrow. Many buyers focus solely on the size of their deposit, but lenders also assess affordability, income, employment status, credit history and existing financial commitments.

At Oakmans, our mortgage advisers have access to thousands of mortgage products from a wide range of lenders. Rather than being restricted to a single bank, they can search the market on your behalf and help identify mortgage products that suit your circumstances. They can also arrange a Mortgage in Principle, giving you a clearer understanding of your budget and demonstrating to sellers that you are a serious buyer.

Whether you are purchasing your first home, moving house or exploring your options with a 5% deposit, our team can guide you through the process from start to finish.

Find out more about our mortgage services here:
https://www.oakmans.co.uk/mortgages#/

Final Thoughts

Buying a home in Birmingham with a 5% deposit is absolutely possible.

Thanks to the continued availability of 95% mortgages and government support designed to encourage lending, many buyers are finding that homeownership is more achievable than they initially thought.

However, your deposit is only one part of the picture. Understanding your affordability, budgeting for additional costs and obtaining professional mortgage advice can all help make the buying process smoother.

If you're considering buying a property in Birmingham, Bromsgrove, Redditch, Shirley or the surrounding areas, speaking to a mortgage adviser before you start viewing could help you understand exactly what is within reach.