ISA guide

Which ISA should you use for a house deposit?

The right ISA for a house deposit depends on how soon you plan to buy and whether you meet the Lifetime ISA's first-home conditions. A Lifetime ISA adds a 25% government bonus towards a first home, a Help to Buy ISA is only for people who already have one, a Cash ISA pays tax-free interest, and a Stocks and Shares ISA puts your capital at risk.

By ISA Comparison editorial team Updated 28 October 2026 Every rule checked against gov.uk

The short answer

A Lifetime ISA adds a 25% government bonus, up to £1,000 a year. A withdrawal for a first home is charge-free only if all gov.uk's conditions are met, including a price of £450,000 or less and a purchase at least 12 months after the first payment. From 29 October 2026 the Budget says a first home above £450,000 that otherwise qualifies carries a 20% charge.
A Help to Buy ISA closed to new accounts on 30 November 2019. Existing holders get a 25% bonus, up to £3,000, when they buy a first home costing up to £250,000 (£450,000 in London).
A Cash ISA pays tax-free interest, and FSCS protects deposits up to £120,000 per person per banking licence. The Cash ISA limit stays £20,000 after the Budget cancelled a planned cut.
A Stocks and Shares ISA puts your capital at risk: its value can fall as well as rise, which matters most when a deposit is needed by a set date.

How do the four options compare?

There is no single best ISA for a house deposit. The table sets out what each of the four offers and its main limit or risk, and the sections below cover the detail. The Lifetime ISA and Help to Buy ISA bonuses are both for buying your first home.

Option	Can you open one?	What it adds	Main limit or risk
Lifetime ISA	Yes, if you are 18 or over but under 40 and meet the UK residence rules.	A 25% government bonus on what you pay in, up to £1,000 a year.	A 25% charge on withdrawals before 60, unless the money is for a first home that meets the conditions or the saver is terminally ill with less than 12 months to live. A first home above £450,000 that otherwise qualifies carries a 20% charge from 29 October 2026.
Help to Buy ISA	No. It closed to new accounts on 30 November 2019.	For existing holders, a 25% government bonus on savings, up to £3,000, when you buy your first home.	The home must cost up to £250,000 (£450,000 in London), and you can pay in up to £200 a month.
Cash ISA	Yes.	Tax-free interest.	The Cash ISA limit stays £20,000 a year.
Stocks and Shares ISA	Yes.	Investment returns, which are not guaranteed.	Capital at risk: the value can fall as well as rise, and you may get back less than you paid in.

How does a Lifetime ISA work for a first home?

You can use a Lifetime ISA to buy your first home or save for later life. You must be 18 or over but under 40 to open one, and your first payment must be made before you are 40. You must also be resident in the UK, or a member of the armed forces or a Crown servant, or their spouse or civil partner, if you do not live in the UK.

You can pay in up to £4,000 each year until you are 50, and the government adds a 25% bonus, up to a maximum of £1,000 a year. The £4,000 counts towards your annual ISA limit, which is £20,000 for 2026/27. A Lifetime ISA can hold cash, stocks and shares, or both. At 50 you can no longer pay in or earn the bonus, but the account stays open.

You can use your savings to buy your first home without a charge if all of these apply:

the property costs £450,000 or less
you buy it at least 12 months after you make your first payment into the Lifetime ISA
you use a conveyancer or solicitor to act for you in the purchase, and the ISA provider pays the funds directly to them
you are buying with a mortgage

A private mortgage from a relative, or from other related people that gov.uk lists, does not count. Our Lifetime ISA guide has the full rules and the cash Lifetime ISA table, and the Lifetime ISA calculator shows what the bonus is worth on your own numbers.

If the home costs more than £450,000, the Budget on 28 October 2026 said that from 29 October 2026 you can still use Lifetime ISA money if the purchase otherwise meets these conditions, with a 20% charge instead of 25%. On a full year’s £4,000 and its £1,000 bonus, which is £5,000, that is a charge of £1,000 and leaves £4,000, before any growth or loss.

How much is the Lifetime ISA bonus worth?

The bonus is 25% of what you pay in, up to £1,000 a year, so £4,000 paid in over a year attracts the full £1,000. To put that next to interest, here is what £4,000 earns in a year at the highest rates in our tables.

£4,000 paid in over a year, compared

Government bonus on the Lifetime ISA: £1,000; 25% of £4,000, if the Lifetime ISA conditions are met
Interest at the highest cash Lifetime ISA rate, 2.60% AER: about £104; Over a full year
Interest at the highest easy access Cash ISA rate, 4.86% AER: about £194; Over a full year
Extra interest from the easy access account: about £90; £194 less £104

This is an illustration, not a forecast. It assumes the whole £4,000 is held for a full year at the rate shown, and ignores any change in rates. The highest rates can include a temporary bonus, so the interest shown is for a first year at most. Our tables were last checked on 6 October 2026: see the cash Lifetime ISA table and the easy access Cash ISA table.

In this illustration the easy access account earns about £90 more in interest than the cash Lifetime ISA, against a £1,000 bonus, which is about 11 times as much.

The bonus only counts if the money is used for a first home that meets the conditions above, or taken out from 60. Otherwise a charge applies: 25% for a withdrawal for another reason, as the next section shows, or 20% for a first home above £450,000 from 29 October 2026.

What happens if you do not buy?

A Lifetime ISA can be withdrawn from without a charge if you are buying your first home, aged 60 or over, or terminally ill with less than 12 months to live. gov.uk says a withdrawal charge of 25% applies if you withdraw for any other reason, and it applies to the total amount, bonus included.

gov.uk’s example, assuming no growth: £800 saved earns a £200 bonus and gives a pot of £1,000. Withdrawing all of it costs 25% of £1,000, which is £250, and leaves £750, which is £50 less than was paid in. The same sums on a full year’s £4,000: the bonus makes it £5,000, the 25% charge is £1,250 and £3,750 is left, which is £250 less than was paid in.

If the holder dies, the Lifetime ISA ends and there is no charge to withdraw the funds. See the Lifetime ISA withdrawal penalty for the detail.

What about a Help to Buy ISA?

You can no longer open a Help to Buy ISA: it closed to new accounts on 30 November 2019. If you already have one, you can pay in up to £200 a month, and the government tops up your savings by 25% (up to £3,000) when you buy your first home. If you are buying with someone who also has a Help to Buy ISA, both of you get the bonus. You can pay in until November 2029 and claim the bonus until November 2030.

The home must have a purchase price up to £250,000 (or £450,000 in London), be the only home you own and be where you intend to live. Your solicitor or conveyancer applies for the bonus. gov.uk’s examples are £1,600 saved (the minimum), which gets a £400 bonus, and £12,000 saved (the maximum), which gets £3,000. The bonus is paid when you buy your first home, so it depends on the purchase going ahead.

If you have a Help to Buy ISA as well as a Lifetime ISA, you can only use the government bonus from one of them to buy your first home. You can transfer money from a Help to Buy ISA to a Lifetime ISA. Transferring money from a Lifetime ISA to a Help to Buy ISA means paying the 25% withdrawal charge. The Help to Buy ISA guide has more on the deadlines.

What about a Cash ISA?

A Cash ISA pays interest, and the interest is tax-free. FSCS protects deposits up to £120,000 per person per banking licence. An easy access Cash ISA lets you pay in and take out money whenever you like. Some Cash ISAs are also flexible: money taken out can be put back in the same tax year without the replacement using up that year’s £20,000 allowance. Not every account is flexible, and its terms say whether it is.

The Cash ISA limit stays £20,000 a year, after a planned cut to £12,000 was cancelled in the Budget on 28 October 2026. See the Cash ISA limit. Our easy access Cash ISA table ranks accounts by rate.

What about a Stocks and Shares ISA?

A Stocks and Shares ISA holds investments, so your capital is at risk: the value can fall as well as rise, and you may get back less than you paid in. That matters most when a deposit is needed by a set date, because a fall shortly before that date may not have time to recover, and there is no guarantee it will.

A Lifetime ISA can also hold stocks and shares, in which case the same risk applies inside it, on top of the Lifetime ISA’s own withdrawal rules. Cash ISA or Stocks and Shares ISA compares the two on risk, access and protection.

The £20,000 ISA allowance for 2026/27 is shared across your ISAs, and the Lifetime ISA’s £4,000 counts towards it. So £4,000 paid into a Lifetime ISA leaves £16,000 of the allowance for other ISAs in 2026/27, such as a Cash ISA or a Stocks and Shares ISA.

The Cash ISA limit stays £20,000 a year, within the overall allowance. See the Cash ISA limit and alternatives to a Cash ISA for how that sits alongside a Lifetime ISA.

What if you are buying with someone else?

If the person you are buying with also has a Lifetime ISA, you can both use your savings and government bonus. To qualify you must both be first-time buyers and meet all the conditions above. If you are buying with someone who also has a Help to Buy ISA, both of you get the 25% bonus.

What decides which ISA fits?

These questions are information, not a recommendation, and none of them has one right answer.

Is it a first home? The Lifetime ISA and Help to Buy ISA bonuses are for a first home. The Lifetime ISA is charge-free up to £450,000, and from 29 October 2026 the Budget says a first home above that carries a 20% charge. The Help to Buy ISA limit is £250,000 (£450,000 in London).
How soon might you buy? A Lifetime ISA’s first-home withdrawal needs the purchase to be at least 12 months after the first payment. An investment has less time to recover from a fall the sooner the money is needed.
Would a 25% charge matter if plans change? It applies to Lifetime ISA withdrawals before 60, unless the money is for a first home or the saver is terminally ill with less than 12 months to live.
Do you already have a Help to Buy ISA? If so, only one of the two bonuses can be used on the same home, and money can move from a Help to Buy ISA into a Lifetime ISA.

Try the Lifetime ISA calculator

Questions people ask

Is a Lifetime ISA or a Cash ISA better for a house deposit?

Neither is better for everyone. A Lifetime ISA adds a 25% government bonus, up to £1,000 a year, but a 25% charge applies to withdrawals before 60 unless the money is for a first home that meets gov.uk's conditions or the saver is terminally ill with less than 12 months to live. The Budget says a first home above £450,000 that otherwise qualifies carries a 20% charge from 29 October 2026. A Cash ISA pays tax-free interest, and FSCS protects deposits up to £120,000 per person per banking licence. What fits depends on how soon you plan to buy and whether the Lifetime ISA's conditions would be met.

Can you use a Lifetime ISA to buy any house?

It must be your first home, and its price decides the charge. For a charge-free withdrawal, all of these must apply: the property costs £450,000 or less, you buy it at least 12 months after your first payment into the Lifetime ISA, a conveyancer or solicitor acts for you and the ISA provider pays the funds directly to them, and you are buying with a mortgage. A private mortgage from a relative does not count. The Budget on 28 October 2026 said that from 29 October 2026 a first home above £450,000 that otherwise meets the qualifying rules can use Lifetime ISA money with a 20% charge instead of 25%.

Can you still open a Help to Buy ISA?

No. It closed to new accounts on 30 November 2019. Existing holders can pay in up to £200 a month until November 2029 and claim the 25% bonus, up to £3,000, until November 2030. See the Help to Buy ISA guide.

What is the risk of using a Stocks and Shares ISA for a house deposit?

Your capital is at risk. The value of investments can fall as well as rise, and you may get back less than you paid in. If the money is needed by a set date, a fall shortly before it may not have time to recover. This is general information, not personal advice.

What happens to a Lifetime ISA if you do not buy a house?

The money can stay in the account, and from 60 it can be taken out without the charge. Withdrawing it before 60 for another reason, other than terminal illness with less than 12 months to live, costs a 25% charge on the whole amount, bonus included. gov.uk's example is £800 saved plus a £200 bonus: withdrawing the £1,000 costs £250 and leaves £750, which is £50 less than was paid in.