Your First Home Scheme: How it works for first time buyers

The new Your First Home Scheme expects to let eligible first time buyers purchase a new-build home with a 2.5% deposit and a 20% Help to Buy-style equity loan. We explain how it will work, who may qualify and the pros and cons.

The government has announced the new Your First Home Scheme, which is expected to help more first time buyers in England get onto the property ladder. With a deposit of just 2.5% and a government-backed equity loan, the scheme could significantly reduce the amount buyers need to borrow. Here’s what we know so far.

Government announces new Your First Home Scheme

• The government announced the Your First Home Scheme on 26 September 2026, saying it will help more first time buyers in England get onto the property ladder.
• Full details, including costs and when the scheme will launch, are expected to be set out by the Chancellor at the Autumn Budget on Wednesday 28 October. Buyers can’t apply yet, although pre-registration is expected to open by the end of the year.
• Prime Minister Andy Burnham said: “Too many young people are struggling with housing, with many giving up hope on ever having a home to call their own. So we are going to help more first-time buyers on to the housing ladder, especially those who can’t call on the bank of mum and dad.”

Hear the latest on the Your First Home Scheme by signing up to our newsletter.

Sign up to our FREE weekly newsletter

for the latest news, advice and money saving offers

What is the Your First Home scheme?

Your First Home is a new first time buyer scheme expected to offer a government-backed equity loan to help eligible buyers purchase a new-build home in England.

Under the proposed Your First Home Scheme:

• You’ll need a 2.5% deposit
• The government will provide a Help to Buy-style equity loan worth 20% of the purchase price
• You’ll need a mortgage for the remaining 77.5%
• The equity loan will initially be interest-free
• You’ll need to buy from a participating developer, which will contribute towards the cost of the scheme

The government says buying via the Your First Home scheme could save buyers hundreds of pounds a month compared with taking out a 95% mortgage.

However, the full terms of the equity loan, including how long it will be interest-free and what happens afterwards, have not yet been announced.

Your First Home scheme example: How will it work?

Here’s how the Your First Home Scheme is expected to work if you were buying a £300,000 new-build home with a 20% equity loan and 2.5% deposit.

Source	% of house value	£ value
Equity loan	20%	£60,000
Deposit	2.5%	£7,500
Mortgage	77.5%	£232,500

So instead of needing £15,000 for a 5% deposit mortgage on a £300,000 home, you would need £7,500 under the proposed scheme.

You would also need to qualify for a £232,500 mortgage, compared to a £285,000 mortgage if you bought with a 5% deposit on the open market.

Use our How much can I borrow calculator to get an idea of the mortgage you may be able to get based on your income.

Who will be eligible for the Your First Home Scheme?

While we don’t yet know the full eligibility rules, the government has confirmed that the Your First Home Scheme will be for first-time buyers in England purchasing a new-build property from a participating developer.

It has also confirmed that there will be:

• A household income cap
• Local property price caps

But the government has not yet said what those caps will be, how they will vary between areas, or whether there will be further conditions around buyers’ savings, credit history, household type, residency or the size of mortgage they can take on.

The full eligibility rules are expected to be announced at the Autumn Budget.

Other key details still to be confirmed for the Your First Home Scheme include:

• When the scheme will open
• How long the equity loan will be interest-free
• What interest will be charged afterwards
• How and when buyers must repay the loan
• Whether there will be restrictions on staircasing, remortgaging, letting or selling
• Which mortgage lenders and developers will participate
• The overall budget and how many buyers the scheme is expected to help

Want to know what first time buyer mortgage options are available now? Get fee-free advice from the expert advisers at Mortgage Advice Bureau.

Need mortgage advice?

Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.

Get mortgage advice now

Applying for the Your First Home Scheme

You can’t apply for the Your First Home Scheme yet and there is currently no application form. Pre-registration is expected to open by the end of 2026, with more details about the application process and when the scheme will launch expected at the Autumn Budget on 28 October 2026.

Participating developers and mortgage lenders have not yet been announced. We’ll update this guide when applications open and more details are confirmed.

How will the Your First Home equity loan be repaid?

This has not yet been confirmed in the government’s official announcement. Some reports suggest the loan may need to be repaid when the property is sold or within a set period, but the final terms are expected at the Autumn Budget.

How will the Your First Home Scheme be funded?

The government will provide the equity loans under the Your First Home Scheme, while participating housebuilders will also be required to contribute towards the cost of the scheme.

This means not every new-build home will necessarily be available through Your First Home. Buyers will need to choose a property from a developer taking part in the scheme.

The government has not yet confirmed how much developers will need to contribute or which housebuilders have signed up. More details are expected at the Autumn Budget.

Your First Home vs Help to Buy: what’s the difference?

The proposed Your First Home has clear similarities with the former Help to Buy equity loan scheme, which closed to new applicants in 2022 and completed its final purchases in 2023.

Both schemes are designed to help first time buyers in England purchase new-build homes using a government-backed equity loan alongside a mortgage and deposit.

However, there are some key differences between the Your First Home Scheme and the Help to Buy equity loan scheme and it is too early to say whether it is a direct replacement.

Scheme	Your First Home Scheme	Help to Buy Equity Loan (2021-2023)
Property	New build from participating developer	New build from participating developer
Minimum deposit	2.5% proposed	5%
Government equity loan	20% proposed	Up to 20% (40% in London)
Equity loan interest-free period	TBC	5 years
Income cap	Yes – TBC	No
Property price cap	Yes – local caps TBC	Regional caps applied

So while Your First Home is being described as a Help to Buy-style scheme, there are significant differences. In particular, the proposed deposit is smaller and household income caps will apply. More differences may emerge when the full rules are published.

Read more about the former Help to Buy equity loan scheme.

Is Your First Home the same as the First Homes Scheme?

No. Your First Home and the First Homes Scheme are two different first time buyer schemes in England.

Your First Home is expected to use a government-backed equity loan, while the First Homes Scheme offers eligible first-time buyers homes at a discount of at least 30% compared with market value. It primarily covers new-build homes, although qualifying First Homes can also be resold under the scheme rules.

This discount stays with the property when it is sold, so each eligible future buyer also purchases it at the relevant discount to market value.

The First Homes Scheme is open to first-time buyers in England. Purchasers must also have a household income of less than £80,000 (or £90,000 in London). Local authorities have some flexibility over other elements of the qualifying criteria.

There is also a price cap. First Homes Scheme properties cannot cost more than £250,000 (or £420,000 in London) after the discount has been applied. Local authorities can set lower local caps, but cannot increase them.

However, First Homes Scheme properties are in very short supply. Find out more in our guide First Homes Scheme.

You may not need to wait for the Your First Home Scheme. Get fee-free advice from the expert advisers at Mortgage Advice Bureau – they can explain the first time buyer mortgage options available now.

Need mortgage advice?

Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.

Get mortgage advice now

HomeOwners Alliance view on the new Your First Home Scheme

Our CEO Paula Higgins commented on the announcement,

Our Mortgage Expert Sarah Tucker commented,

Your First Home Scheme: Pros and cons

The Your First Home Scheme could make it easier for some first time buyers to get onto the property ladder, but there are potential drawbacks too. And with the full rules yet to be announced, some important questions remain unanswered.

Pros of the Your First Home Scheme

You could buy your first home sooner.

• Eligible buyers only need to save a 2.5% deposit which means some could get on the property ladder sooner than if they had to save the usual 5% deposit. Read our guide How much deposit do I need to buy a house.

You’ll need a smaller mortgage

• With a 20% government-backed equity loan and 2.5% deposit, you would need a mortgage for 77.5% of the property’s value. This could make it easier to meet a lender’s affordability requirements than if you needed to borrow 95% of the property’s value, although you’ll still need to pass the lender’s usual checks.

You could benefit if your home increases in value

• Buying sooner means you could benefit from any increase in the value of your home. However, property prices can fall as well as rise and we don’t yet know exactly how the Your First Home equity loan will work when the property is sold or the loan is repaid.

Cons of the Your First Home Scheme

You’ll have an equity loan to repay

• The 20% contribution isn’t free money. You’ll need to repay the equity loan, although the government has not yet announced exactly when or how this will work.

You may have to pay interest

• The government has said there will be an initial interest-free period, but it hasn’t yet confirmed how long this will last or what interest will be charged afterwards.

You could pay a new-build premium

• The scheme will only be available on new-build properties from participating developers and you may pay a ‘new build premium’.
• An independent evaluation commissioned by the Ministry of Housing, Communities and Local Government found that Help to Buy customers paid about 1% more than buyers of comparable new builds. New builds themselves cost around 5.5% more than comparable existing homes during the period studied, with the new-build premium around 8–9% in London.
• So compare the price carefully rather than focusing only on the small deposit.

There’s a risk of negative equity

• With such a small deposit, you have little equity of your own at the outset. If the value of your property falls, you could fall into negative equity and this could make it harder to sell or remortgage.
• There is a further risk for buyers of new-build flats putting down very small deposits. HM Land Registry’s July index shows that London flat and maisonette prices fell 6.6% over the preceding year, compared with a 3.3% fall across all London properties.
• A modest fall in value could wipe out a buyer’s small initial stake. High or rising service charges, building safety concerns and onerous lease terms can also make a flat harder to afford, remortgage or sell.

Will it work in London?

• The Help to Buy scheme offered an equity loan of up to 40% in the capital, but the new Your First Home Scheme proposal is for 20%. According to HM Land Registry’s July 2026 House Price Index, the average London first-time buyer paid around £467,000. At that price, a 2.5% deposit would be roughly £11,700, but after the 20% equity loan is taken off, the buyer would still need a mortgage of about £362,000.   
• At an illustrative 4.5-times-income borrowing limit, that mortgage would require household income of roughly £80,000, before a lender considers other commitments or a flat’s service charge. This means that the deposit is only one part of the affordability problem.
• We do not yet know the proposed household income or local property price caps. If they are set too low, Londoners could qualify for the scheme but be unable to afford an eligible home – or afford a home but be excluded by the income cap.

Your choice of property will be restricted

• You’ll need to buy a new-build home from a developer participating in the scheme, and local property price caps will also apply. This could limit the number of suitable homes available in your area.

Alternatives to the Your First Home Scheme

There are different ways that it may be possible for you to get a mortgage with a small or even no deposit.

For example:

• 100% mortgages: A small number of UK lenders now offer no deposit mortgages to eligible buyers. These include products such as for those with a track record of renting as well as some guarantor mortgages. Find out more in our guide 100% mortgages explained: How they work and who can get one.
• Some lenders offer mortgages if you have a 1% deposit or 2% deposit.
• Shared Ownership. This allows you to buy a share of a property (usually 25%-75%) and pay rent on the remaining share. This makes buying more affordable. But there are pros and cons to this complicated scheme, so do your research carefully. Read our guide What is shared ownership? Is it worth it?

Not sure which first time buyer option could be right for you? Get fee-free advice from the expert advisers at Mortgage Advice Bureau – they can talk you through the mortgage options you may qualify for.

Need mortgage advice?

Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.

Get mortgage advice now

Should I use the Your First Home scheme?

It is too early to say whether the Your First Home scheme will be right for you, and it will also depend on your circumstances. A lower deposit can bring homeownership closer, but it does not make a home cheaper overall. Buyers should consider the full mortgage payment, likely future interest rates, service charges, insurance, maintenance and the terms of the equity loan.

There are a number of no deposit mortgage schemes, 1% deposit schemes and other help for first-time buyers that may be more appropriate for you. Speak to a fee-free mortgage broker and they can talk you through the range of options.

Need mortgage advice?

Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.

Get mortgage advice now

Will this help solve the housing shortage?

The Your First Home scheme is a demand-side measure. It may help some buyers access new-build homes that are already being built, and could improve confidence for developers to start more schemes. But it is not a substitute for building enough genuinely affordable homes in the places people need them.

Official data published this week shows new-build starts in England rose by 15% in the year to June 2026, to 136,330. In the second quarter alone, starts were 20% higher than a year earlier. But the government is still a long way from hitting its pledge to deliver 1.5 million additional homes in England over this Parliament.

Frequently Asked Questions