If you’ve been eyeing the housing market with a mix of hope and despair, here’s some good news: low-deposit mortgages are back in a big way. According to the latest from Moneyfacts, the number of 90% and 95% loan-to-value (LTV) mortgage deals is the highest it’s been in 17 years. That’s right – not since 2008 have we seen this kind of choice if you’re only scraping together a 5–10% deposit.

So, what’s behind this surge, and more importantly, is it really the lifeline it sounds like?

Good News for First-Time Buyers

Let’s start with the positives, because frankly, we don’t get enough of those these days. If you’re trying to buy your first home and struggling to save while rents eat up half your paycheck, this could be exactly the shift you’ve been waiting for.

There are now 442 mortgage products at 95% LTV alone. That means you only need a 5% deposit – so if you’re buying a £200k home, we’re talking about £10k upfront, not £20k or more.

That makes homeownership feel… well, possible. And in this market, feeling like you’ve got a shot is half the battle.

The Government’s been nudging lenders to support growth and make life easier for aspiring homeowners. This sudden burst of low-deposit deals shows that lenders are listening – or at least sensing opportunity. It’s also a sign of confidence in the housing market from banks, who wouldn’t be chucking out 95% LTV mortgages if they thought prices were about to fall off a cliff.

But (and There’s Always a But)…

Here’s the trade-off: low deposit often means higher cost.

Lenders aren’t daft – they know that letting people borrow 95% of a home’s value comes with risk. So they usually charge for the privilege, with higher interest rates than someone putting down, say, 25%.

That means your monthly payments could be significantly higher, and over the course of the mortgage, you could end up paying thousands more in interest.

And then there’s the big worry: negative equity. If house prices drop and you’ve only got 5% equity, you might end up owing more than your home’s worth. That can trap you in the property, make it harder to move, or kill your chances of remortgaging to a better deal down the line.

Oh, and let’s not pretend it’s easy to get one of these deals either. Even with the lower deposit, you’ll still need to pass affordability checks – and lenders are very keen on making sure you can afford your repayments if rates rise.

Is This a Clever Move or a Risky One?

That depends on your situation. If you’ve got a stable income, can comfortably afford the repayments, and don’t want to wait years to save a bigger deposit while prices creep higher – a 95% mortgage could be your best route in.

But if the repayments feel tight, or if your job feels a bit shaky, it might be worth waiting and saving a bit more. The last thing you want is to stretch yourself too far and end up skint or stuck.

Also, while the number of deals is up, they’re still only about 6% of all mortgage options, so your choice might be limited – especially when you come to remortgage.

A Word to the Wise

With house prices still high, inflation finally cooling, and mortgage rates starting to dip again, it’s easy to get swept up in the idea that now’s the time to buy. And maybe it is. But going in with a tiny deposit means you’ve got less wiggle room if things go sideways.

If you’re unsure, have a chat with a mortgage broker. They’ll help you figure out whether one of these low-deposit deals actually suits you, or whether you’d be better off holding out for a bit longer (no one wants to buy at the wrong time and regret it later).

The Bottom Line

A record number of low-deposit mortgage deals sounds exciting – and for many first-time buyers, it could genuinely open doors that felt shut for years.

But it’s not a free pass. The higher rates, the risk of negative equity, and the tight lending rules mean you need to go in with eyes wide open.

So if you’re thinking about jumping into the market with just 5% down, go for it – but do your homework, crunch the numbers, and get advice. Because while this might be your way in, it still pays to be cautious when borrowing big.