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Most buy to let lenders want at least 25% of the purchase price as a deposit, and some want 30% to 40%. But the honest answer is that the percentage is not really the thing that decides it. What decides how much deposit you need is the rent. If the rent on the property is strong relative to its price, 25% may be enough. If the rent is weak relative to the price, no lender will lend you 75% no matter how good your income is, and the deposit you actually need can be far higher.
Why is the buy to let deposit bigger than on a residential mortgage?
Because the lender is taking a different kind of risk. On your own home, the loan is repaid from your income and you have a powerful personal incentive to keep paying. On a rental property, the loan is largely repaid from rent that might stop, from a tenant who might leave, on a property you do not live in. Lenders price that by asking for more of your money in the deal.
Why the percentage is the wrong question
Ask most people what deposit they need and they will give you a number like 25%. Ask a lender and they will run a calculation. The calculation is what matters, and it works backwards from the rent rather than forwards from the price.
In practice a lender decides the maximum loan the rent will support, and your deposit is simply whatever is left over. So the question is not “what percentage do I need”, it is “what loan will this property’s rent actually carry, and can I fund the gap”.
Most buy to let lenders want at least 25% deposit, and some want 30% to 40%.
The deposit is really an output of the rent, not a fixed percentage of the price.
Lenders stress-test the rent against a higher interest rate, then require a margin on top, commonly 125% or 145%.
A higher rate taxpayer buying personally is usually assessed at the tougher margin than a basic rate taxpayer.
On average properties across the sixteen areas I cover, only two passed at 75% borrowing in personal name.
What is the rental cover test?
Lenders stress-test whether the rent would still cover the mortgage interest if rates were higher than they are now, and they require the rent to exceed that stressed payment by a margin. That margin is commonly 125% or 145% depending on your tax position and whether you are borrowing personally or through a company.
So a property has to clear two hurdles at once: the stressed interest rate, and the cover margin on top. Both are set by the lender, and they vary between lenders, which is why the same property can be lendable at one and refused at another. There is a fuller explanation in my guide to how a buy to let remortgage works.
How does your tax rate change the deposit you need?
More than most people expect. A higher rate taxpayer borrowing in their own name is typically assessed at the tougher 145% cover margin, while a basic rate taxpayer is often assessed at 125%. Same property, same rent, different maximum loan, and therefore a different deposit.
This catches people out because nothing about the property has changed. The change is in who is buying it.
Does a limited company reduce the deposit you need?
Often it reduces the cover margin, which increases the maximum loan, which lowers the deposit needed. A limited company is usually assessed at 125% rather than 145%. That is a real difference and it is one of the two levers people use when a property will not stack up.
It is not a free win though. Company buy to let rates and fees are generally higher, so an easier cover test does not automatically mean a cheaper mortgage overall. And whether a company is right for you is a tax question as much as a mortgage one, so your accountant needs to be in that conversation, not just your broker.
What does this look like in the real world?
Here is why this matters more than a headline percentage. I ran the cover test across all sixteen local authorities I cover in Hampshire and Dorset, using HM Land Registry and ONS house price data for May 2026 and ONS private rent data for June 2026, at 75% loan to value and a 5.5% stress rate.
For a higher rate taxpayer buying in their own name at 145% cover, an average property passed in only two of the sixteen areas. Move the same test into a limited company at 125% and four of the sixteen passed. Drop the borrowing to 60% loan to value inside a company and nine of the sixteen passed. In other words, in most of the area a 25% deposit is not enough on an average property, and the thing that fixes it is either a bigger deposit or a different structure.
Source: HTG Mortgages cover-test model, HM Land Registry and ONS house price data (May 2026), ONS private rent data (June 2026), 5.5% stress rate. Illustrative, not a quote.
The full picture is on the Hampshire buy to let page, and Portsmouth is the strongest area of the sixteen.
Speak to an expert
Want to know what deposit a specific property would actually need? Call me on 01425 203055 or email info@htgmortgages.com. I will run the numbers before you offer.
What if the valuation comes in lower than the price you agreed?
A down valuation is when the lender’s surveyor decides the property is worth less than the price you have agreed with the seller. The lender works from the lower figure, so the loan shrinks and a gap opens up in your funding.
I am seeing a lot of these at the moment. When one lands on a case there are two routes, and both get used. Either the buyer finds more deposit to cover the gap, or they go back to the seller and renegotiate the price, using the valuation as the evidence. Sellers rarely enjoy that conversation, but a surveyor’s figure is hard to argue with and plenty of purchases still complete afterwards.
The practical point is to keep something back. If every last pound is committed to the deposit, a down valuation leaves you with no room to move.
Where can the deposit come from?
Savings is the obvious one. Beyond that, the two most common sources are equity released from another property, usually your own home or an existing rental, and a gift from family. Lenders have their own rules about gifted deposits on buy to let, and they are generally stricter than on a residential purchase, so check before you rely on it. Borrowing the deposit on an unsecured loan is usually a problem rather than a solution, because the repayments count against you.
What else do you need on top of the deposit?
People budget for the deposit and forget the rest. On a buy to let purchase you should also allow for the higher rate of stamp duty on additional property, currently an extra 5% on top of standard rates, plus the lender’s arrangement or product fee, a valuation, legal fees, and whatever the property needs before a tenant can move in. Between them those can add up to a meaningful sum, and they are payable in cash rather than added to the loan.
Can the product fee push your loan above 75%?
It can, and this one catches people out. Most buy to let products carry an arrangement fee, and it is common to add it to the loan rather than pay it up front. If your borrowing is already at exactly 75% of the property value, adding the fee tips the total over the lender’s maximum and the case fails on a technicality.
There are two ways round it. Either leave a bit of headroom inside the 75% so the fee has somewhere to sit, or use a lender that allows the fee to go on top of its maximum loan to value. Lenders differ on this, and checking it before the application goes in is part of what I do.
So what should you actually do?
Get the rent checked before you get attached to a property. The most useful thirty minutes in a buy to let purchase is the one where someone works out what the rent will support, because it either confirms your deposit is enough or tells you early that it is not. That is free, and I would rather tell you a property does not work than arrange you a mortgage you regret. If you are buying your first rental, the first time landlord page is the right starting point, or the buy to let hub for everything else. My advice fee is a flat £350, payable only once your mortgage offer is issued, and here is how that compares with percentage broker fees.
Last updated: 12 August 2026. Information correct as at August 2026. This is general information rather than advice on your own situation.
It is worth seeing where the deposit sits in the wider market too. Record numbers of landlords are selling up, and only around 14% of those homes are being bought by other landlords.
For more landlord reading, all of my buy to let articles are collected in one place.
Beside the deposit, the other big cash item is the tax; my guide to stamp duty on a buy to let has the current bands and worked examples.
Related guides: how much you can borrow on a buy to let, stamp duty on a buy to let and whether an 85% LTV buy to let exists.
Need Personal Mortgage Advice?
Every buyer’s situation is different. While this guide explains the general rules, the right mortgage for you depends on your income, deposit, credit history and future plans. If you’d like tailored advice, I’m here to help, with whole-of-market coverage.
