Deposit goal & Lifetime ISA
A Lifetime ISA adds a 25% government bonus on savings up to £4,000 a tax year, worth up to £1,000 annually, for a first home priced up to £450,000, under gov.uk's Lifetime ISA rules. This calculator estimates how many months of saving are needed to reach a deposit goal once the bonus is included.
Withdrawal warning. Take money out of a Lifetime ISA for anything other than a first home, reaching age 60, or terminal illness, and a 25% charge applies to the whole pot, not just the bonus, under gov.uk's Lifetime ISA withdrawal rules. On a £1,000 pot that is an estimated £250 charge, leaving £750. A Lifetime ISA used this way is estimated to leave less than was paid in. Only use a LISA for money that is confidently going toward a first home or retirement.
How does the bonus build my deposit?
Every pound paid in, up to £4,000 a tax year, earns a 25p bonus from the government, under gov.uk's Lifetime ISA rules. The bonus is added monthly, so it compounds slightly if the account also earns interest or investment growth. The hard cap is £1,000 of bonus per year, so paying in more than £4,000 in one tax year does nothing extra. To collect the full bonus, funding needs to be spread across several tax years rather than paid in one lump.
The saver in the example above reaches the deposit faster than plain saving because roughly a fifth of the target arrives as a government bonus. The trade-off is the rigidity of the scheme. The £450,000 price cap set by gov.uk, and the withdrawal charge, mean a Lifetime ISA suits a genuine first-home plan rather than general saving.
How long does it take to reach the deposit in this example?
Starting with £2,000 and paying in £340 a month towards a £40,000 deposit, the saver's own contributions come to £32,600. The bonus is estimated to add £7,510, reaching the goal in about 7 years 6 months. Saving the same amount each month in a normal account, with no bonus, is estimated to take 9 years 4 months.
Common questions
How much is the Lifetime ISA bonus?
The government adds 25% to what you pay in, up to £4,000 of contributions per tax year. That is a maximum bonus of £1,000 a year. Pay in £4,000 and you get £1,000 on top. Contributions above £4,000 in a year earn no further bonus.
What is the house price limit?
The Lifetime ISA can only be used to buy a first home worth up to £450,000. Buy above that and you lose the bonus and pay the withdrawal charge. The cap is the same across the whole UK, including London, and has not risen with house prices.
What is the 25% withdrawal penalty?
If you take the money out for anything other than a first home, reaching age 60, or terminal illness, a 25% charge is applied to the whole pot, not just the bonus. Because the bonus was 25% up and the charge is 25% of the grossed-up total, you lose about 6.25% of your own money on top of the bonus. Only save what you are confident you will use for a first home or retirement.
Who can open a Lifetime ISA?
You must be aged 18 to 39 to open one. You can keep paying in and earning the bonus until you turn 50. To use it for a first home you must have held the account for at least 12 months before the purchase.
Can two first-time buyers both use a LISA?
Yes. If you buy together and both are first-time buyers, you can each use your own Lifetime ISA and each get the bonus, as long as the property is within the £450,000 cap. That doubles the effective bonus towards the same deposit.
How does the bonus build my deposit?
The bonus is paid on contributions of up to £4,000 in a tax year, not on the balance already held. Paying steadily each month keeps saving inside that annual cap, so the maximum £1,000 bonus is earned every year. The bonus is normally added the month after each contribution, so it can then earn interest or investment growth alongside the rest of the deposit.
How long does it take to reach the deposit in this example?
Starting with £2,000 and saving £340 a month towards a £40,000 deposit, the saver contributes £32,600 and receives £7,510 in bonus, reaching the goal in about 7 years 6 months. Saving the same amount with no bonus would take 9 years 4 months instead, showing how much the bonus speeds up a deposit.
Sources & Rate Verification
Rates verified against official statutory guidance on 6 September 2026.