You’ll normally need around a 10% deposit for your mortgage. And with the average UK price sitting at over £271,500, that means you’ll need to save around £27,200 for a deposit. Easier said than done!
Getting help from your parents – some money towards that amount, or even the whole amount – can help you reach that 10% mark sooner. Here, we explain what you need to know about gifted deposits before you get one.
Deposit requirements and house prices can change over time and vary by lender. For context, the average UK house price was around £270,000 in mid-2025, according to the UK House Price Index.
A gifted deposit is when someone gives you part or all of the money you need to put a deposit down on a house or flat. It has to be a gift.
That last part is crucial. A gifted deposit must be a gift with no strings attached. If you’re expected to pay back the money you’ve been given towards your deposit, it’s not a gift, it’s a loan (and this can affect your ability to get a mortgage – more on that below).
Gifted deposits are often given by family members – usually parents, but sometimes siblings or grandparents – and they’re an increasingly popular way of helping first-time buyers get on the property ladder. In fact, around half of first-time buyers get help from their family to buy their first home, according to the estate agent Savills.
And the gift doesn’t have to cover the entire deposit either. If your family member can help you increase your deposit from, say, 5% to 10%, this could open up more attractive mortgage deals while reducing the amount you need to pay each month. A larger deposit can improve access to some mortgage rates, but the rate and monthly payment you’re offered will depend on factors like the lender, product, interest rate, fees, and mortgage term.
Whether a gifted deposit is accepted and from whom depends on each lender’s criteria and your individual circumstances.
Many lenders are more likely to accept gifted deposits from immediate family members, but acceptance is never guaranteed and criteria vary between lenders. However, more distant family members, such as aunts, uncles, cousins, or people not actually related to you by blood, may not be approved by many lenders.
It’s also worth bearing in mind that most lenders won’t accept a gifted deposit if the person or people giving it to you are also the vendors (sellers). It’s not a common scenario but, if you’re buying a property from your parents and they’re helping you fund it with what is basically a price reduction on the property, it could make it harder to get a mortgage.
Before you accept your family member’s kind offer of a gifted deposit, check with a mortgage advisor to make sure it’s likely to be accepted by a lender.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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Every mortgage lender is different and they all have their own criteria around gifted deposits. But they mostly agree on the following two rules:
Before accepting a gifted deposit for a house (or flat) deposit, your lender will want the giver to declare in writing that it’s a gift with no obligation for repayment.
If you do have to pay back the money, the lender will consider it a loan, and one of two things will happen:
The latter could affect your affordability (your lender’s view of how much mortgage you can afford) and prevent you from borrowing the amount you need to complete the purchase.
You’ll need a “gifted deposit letter”. Some larger banks and mortgage lenders will supply you with a form to fill in, while smaller lenders may insist on a lawyer’s letter.
This letter must include:
You and the giver will need to sign this letter to confirm the details are correct, and you’ll need to have it signed by a witness, too.
In addition to this bit of paperwork, the person providing the gift will need to prove they actually have the money to gift you. This means they’ll need to gather their most recent bank statements and evidence of the source of the money (like payslips, or a will if it’s a lump sum from an inheritance). This step is crucial for the anti-money laundering checks carried out by your lender and conveyancer.
Finally, the person providing the gift also needs to provide a valid photo ID (such as a passport or driving licence) and two proofs of address (like a council tax bill, utility bill, or bank statement).
The giver may be asked on the gift deposit letter whether they expect to have any interest or equity in the property you’re buying. They may also be asked if they expect to have the right to live in it after you’ve bought it.
If this isn’t included on the form, your lender may ask you to provide a separate signed letter. This letter should state that the person giving you the gift has no legal interest in your property.
Generally speaking, there’s no limit on how large a gifted deposit can be. However, some lenders may only be willing to accept a gifted deposit up to a certain percentage of the property’s value. That’s because they may view it as risky if the buyer isn’t putting any of their own money into the deposit.
When accepting a sizeable gifted deposit, the other thing to keep in mind is inheritance tax.
Every UK taxpayer can gift up to £3,000 a year, completely exempt from inheritance tax – the tax on the estate (the property, money and possessions) of someone who’s died.
You can carry over any unused inheritance tax allowance from the previous tax year (but not from tax years before that). That means if your family member didn’t gift anyone anything last tax year, they could, in theory, give you £6,000 this year without any inheritance tax consequences.
But if the amount they give you exceeds their inheritance tax allowance, the amount over the allowance could be liable for inheritance tax. This is because if the person gifting you the money dies within seven years of the gift, it would still be classed as part of their estate.
Inheritance tax only applies if the person’s total estate (including the gift) is worth more than £325,000.
This is general information, not tax advice. Inheritance tax rules can be complex and depend on individual circumstances, so it’s a good idea to check HMRC guidance or speak to a tax professional.
There are a few ways your parents can help you get on the property ladder without gifting you deposit. These include having your parent named as a guarantor on your mortgage (meaning they would be liable for payments if you fall behind) or taking out a joint mortgage with your parent, where you would both be responsible for the repayment of the loan.
Read more about all types of mortgages here.
Meanwhile, if your parents can’t help, you could look at schemes like shared ownership or the government’s Mortgage Guarantee Scheme, introduced in July 2025, may support some first-time buyers mortgages with a 5% deposit. Availability depends on lender participation and individual eligibility criteria.
Not sure about the next steps? Habito’s friendly team of mortgage brokers are on hand to help you understand your mortgage options with a gifted deposit.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Get started here. Our advice is free!
Habito is a mortgage broker, authorised and regulated by the Financial Conduct Authority (FCA). We can help you understand your options and apply to a lender, but mortgage approval depends on the lender’s checks and criteria
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