Minimum Deposits for a Mortgage

When you shop around for a house, be prepared to pay a significant amount of cash before the deal is finally done. You'll need money for closing costs for the mortgage loan and to give a deposit to the seller as earnest money to prove that you're serious about closing the deal. Another item you'll need to keep in mind is the mortgage deposit.

What Is a Mortgage Deposit?

A mortgage deposit is another term for a down payment. When you apply for a mortgage, the lender usually requires you to put your own cash into the home before granting the rest as a loan. To understand why a lender asks for a down payment, relate this to another type of scenario. Say an acquaintance, who you didn't know very well, asked you to lend him money to buy a piece of equipment for his business. You'd probably feel more comfortable knowing that the acquaintance put part of his own money toward the purchase of the equipment rather than simply using your money. That means both his money and yours is at risk, so he'll probably work harder to keep and pay off the equipment.

Minimum Required

The common minimum deposit for a standard mortgage loan is 20 percent. Not all lenders require this much down on the loan, particularly if you have an outstanding credit rating and history. You might get away with a minimum deposit of between 10 to 20 percent. The requirement for a government-backed loan is much less, at about 3.5 percent. These minimums may vary with time and according to the lender's specific requirements.


The lender wants to verify the sources of your deposit money. Acceptable sources include your own savings, cash, stocks, bonds, retirement funds, gifts from close family members, and sales of personal property. Some employers and community organizations also provide people with down-payment assistance. The lender might also allow you to borrow money to pay the deposit if it's a secured loan.

Tips for Saving

Before you start searching for a house, start saving toward your deposit. Take at least a year to gather funds toward a down payment and make personal sacrifices to reach your financial goal. Create a budget and crunch your numbers to come up with as much to put toward savings each month as possible. Place the money in a safe savings account, like a certificate of deposit, until you're ready to start looking for homes and mortgage lenders.

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About the Author

Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.