What is the mortgage guarantee scheme?

Key takeaways

• The mortgage guarantee scheme helps you buy a home with just a 5% deposit by allowing you to borrow up to 95% of the property's value.
• The scheme was made permanent in July 2025 under the new "Freedom to Buy" branding, so it's here to stay.
• You can borrow up to £570,000 on properties worth £600,000 or less, and you don't need to be a first-time buyer to use it.
• Major lenders, including Lloyds, Barclays, Halifax, Natwest, Santander, and HSBC offer mortgages through the scheme. However, many lenders also offer their own 95% LTV mortgages now, which provide the same low-deposit solution. See if you’re eligible.
• Alternatives include 100% mortgages like Skipton's Track Record Mortgage, shared ownership, and guarantor mortgages.

What is the mortgage guarantee scheme?

The mortgage guarantee scheme is a government initiative that encourages lenders to offer 95% Loan to Value (LTV) mortgages by giving them a partial state-backed guarantee. First launched in 2021, it was made permanent in July 2025, now branded "Freedom to Buy" by the Labour government, so buyers with as little as a 5% deposit can keep accessing low-deposit deals as part of their housing policy.

You might also like:How to buy a home with a small deposit

How does the mortgage guarantee scheme work?

The mortgage guarantee scheme works by the government guaranteeing a percentage of the mortgage. The scheme works by reducing risk for lenders: if a borrower couldn't keep up with repayments, the government would cover a portion of the lender's losses.

This protection gives lenders confidence to offer mortgages with higher loan-to-value ratios, giving them the confidence to offer these types of mortgages.

The main advantage of the mortgage guarantee scheme for you as a buyer is that you could find it easier to get a mortgage with a small deposit, as you typically only need 5% of the property purchase price saved up to be eligible for the scheme.

Here's a quick look at what happens behind the scenes:

• Lenders pay a small fee to HM Treasury for every loan they place under the scheme.
• The guarantee only covers borrowing above 80% LTV, so the state’'s exposure is limited.
• The total liability is capped at £3.2 billion, which the Treasury classes as "low risk".

Keep in mind that the mortgage guarantee scheme is not the only 5% deposit mortgage scheme available. See what other options are open to you today with Tembo.

Is the mortgage guarantee scheme still available?

Yes. The scheme was originally due to close to new applications on 30 June 2025 (having first opened in April 2021), but the new government confirmed in July 2025 that it will remain in place indefinitely under the refreshed Freedom to Buy branding.

However, as 95% LTV mortgages have become more widely available, many lenders now offer these products independently, as they've become more comfortable with the risk profile of low-deposit buyers. So you don’t have to use the mortgage guarantee scheme to access a 5% deposit mortgage.

It's also important to know that you'll still need to pass the lender's affordability checks to show you can comfortably afford the mortgage repayments, regardless of the government guarantee.

How much can you borrow through the mortgage guarantee scheme?

You can borrow up to £570,000 (that's 95% of the £600,000 property price cap) on the mortgage guarantee scheme, but some lenders may offer you a smaller loan based on their affordability criteria.

Typically, you can borrow up to 4.5x your household income for a mortgage, but some borrowers may be offered less based on their creditworthiness and other factors, such as being self-employed.

The good news is that some borrowers can access mortgages of 5-6x their income through specialist schemes - this is where our expertise really comes in, as we can help you explore these options.

Learn more: How big of a mortgage can I get?

Which lenders offer the mortgage guarantee scheme?

A number of mortgage lenders are willing to offer 95% mortgages through the mortgage guarantee scheme including:

• Lloyds
• Barclays
• Halifax
• Bank of Scotland
• Natwest
• Santander
• HSBC
• Virgin Money

Many other lenders offer their own 95% LTV mortgages that aren't part of the mortgage guarantee scheme, but provide the same benefit: the ability to purchase a home with just a 5% deposit. See if you’re eligible today.

Learn more: Low deposit mortgage schemes for first-time buyers

Is the mortgage guarantee scheme only for first-time buyers?

No, you don't need to be a first-time buyer to use the mortgage guarantee scheme. You can use it to buy a home with a small deposit, even if you've bought a property before or inherited a relative's home.

There are other criteria to be aware of:

• You must have a deposit of between 5% and 9% of the property's purchase price
• You must buy a home worth £600,000 or less in the UK, which you intend to live in yourself. You can't use the mortgage guarantee scheme for a second home or buy-to-let property.
• It can't be a new build. New build homes often lose value in the first few years after being built, making lenders see them as higher risk
• You can only use a repayment mortgage, rather than an interest-only mortgage.
• You need to meet the lender's mortgage affordability criteria. Each lender will have their own requirements.

What are the alternatives to the mortgage guarantee scheme?

You may be able to get a 95% mortgage even without the mortgage guarantee scheme. In some cases, you can even borrow 100% of the property's value. If you can prove that you've paid your rent and household bills in full and on time for 12 months, you may be eligible for Skipton Building Society's Track Record Mortgage. If your application is approved, you'll be given a 100% mortgage, no deposit needed.

Another option is a shared ownership mortgage. Instead of buying a house with a deposit and mortgage, you'll buy a share of a home and pay rent on the rest. You'll need a much smaller deposit than you would with a traditional mortgage, and you won't need to borrow as much.

There are also some guarantor mortgage options, like a Savings as Security mortgage, which could help you get on the ladder with a helping hand from a family member.