Published 2026-07-20 · New Build Mortgage Guide · Written and reviewed by Phillip Wakeling-Smith (CeMAP)

Cambridge First Step at 98% LTV: the 2% deposit mortgage that accepts new-build houses

Quick answer: Cambridge Building Society's First Step is currently the lowest-deposit route to a new-build house that doesn't need a guarantor or a builder scheme: a 2% deposit (98% LTV), first-time buyers only, up to a £500,000 loan at up to 5.5× household income — and, unusually for this end of the market, new-build houses are accepted. New-build flats are explicitly excluded. It went whole-of-market on 8 July 2026 at a 5.89% 2-year fix with a £499 fee.

The product, in full

What's confirmed from the launch coverage and Cambridge's own announcements:

• Deposit / LTV: 2% minimum deposit — 98% LTV.
• Who: first-time buyers only.
• Property: minimum purchase price £100,000; maximum loan £500,000. New-build houses accepted; new-build flats not accepted.
• Borrowing: up to 5.5× household income, where affordable.
• Rate/fees: launched to the whole market at a 5.89% 2-year fix, £499 product fee, free basic valuation, 10% annual overpayment allowance.
• Underwriting: Cambridge describes decisions as made on individual circumstances rather than credit score alone — a manual-underwriting posture that matters at 98%, where automated scorecards are at their harshest.
• Self-employed: considered under Cambridge's standard criteria — no First-Step-specific carve-out either way.

Two details worth knowing about the product's history: First Step relaunched in March 2026 as a direct/selected-partner product at a 5.19% 2-year fix, then opened to all brokers on 8 July 2026 at the higher 5.89% — so if you saw the lower rate quoted earlier in the year, that's why. It also sits alongside Cambridge's separate, Cambridgeshire-only Rent to Home scheme (which returns 70% of rent paid towards a deposit) — related mission, different product.

The gifted-deposit question — family yes, builder unconfirmed

First Step accepts gifted deposits. For most 2%-deposit buyers that means a family gift, and that's straightforwardly within the product.

What the published material does not say is whether a developer's gifted-deposit incentive can form the 2% on a new-build purchase — the builder-funded route we cover in our builder deposit contributions guide. Lenders differ sharply on whether builder money counts as "deposit" at all, and nothing in Cambridge's launch coverage settles it. If your plan is "builder pays the 2%", have your broker put that exact question to Cambridge before you reserve — and see our low-deposit routes guide for the routes where builder-funded deposits are confirmed (Perenna's 95% + builder-gift route being the clearest).

Why houses-only matters

The flat exclusion isn't a quirk — it's the market's standing pattern: lenders cap new-build flats harder than houses everywhere, for the reasons (premium risk, resale depth, service charges) we unpack in our house-vs-flat LTV caps guide. First Step at 98% simply follows that grain. If you're buying a new-build flat with a small deposit, your realistic ceiling at most lenders remains 90% — check the current per-lender caps in the lender tables.

A 2% deposit still needs a 98% valuation

One caution that applies doubly at this LTV: a 98% mortgage leaves no room for a down-valuation. If the surveyor values your plot £5,000 under the price, there's no equity buffer to absorb it — the deal reshapes or the deposit grows. On new builds, where valuers anchor to local resales rather than the developer's price list, that risk is real: check your plot against local evidence with the premium checker before you commit.

Is Skipton about to answer?

Short version: there's no announced or credibly trailed Skipton equivalent. We checked the trade press and Skipton's public channels — no 98%-style product, no Track Record successor, no teaser. What Skipton has done recently (February 2026) is extend its Delayed Start feature — up to three months' payment holiday at the start of the mortgage — to its 100% Track Record product and to shared ownership. Track Record remains the true no-deposit route for established renters (new-build houses qualify), and Delayed Start makes the first months cheaper — but neither is a 98% product, and any talk of one is, for now, just talk. If that changes we'll update this page and the low-deposit hub.

Where First Step fits in the low-deposit landscape

• You have 2% and you're a first-time buyer buying a house — First Step is currently the benchmark to beat; compare it against a 95% deal (the extra 3% deposit usually buys a meaningfully lower rate).
• You have nothing, but the builder is offering 5% — the Perenna builder-gift route may beat it: see the low-deposit guide.
• You have nothing and rent reliably — Skipton Track Record (100%) is the route to price up.
• You're not a first-time buyer — First Step is off the table; the 95% mainstream ranges are your floor.

Run your own numbers across the whole market with the free affordability check, and check plot-level risk with our tools before reserving.

Product details from Cambridge Building Society's March and July 2026 launch announcements and trade coverage, correct as of 20 July 2026. Points the published material doesn't settle — minimum income, age and term limits, ERC schedule, and whether builder-funded gifts qualify — are flagged above rather than guessed; confirm them with Cambridge or your broker. Rates change frequently. This article is information, not financial advice.