Your First Home Scheme: An Initial Guide for First-Time Buyers
Your First Home is a proposed government housing scheme in England designed to make homeownership accessible. Aimed at first-time buyers, it lowers upfront costs by combining a 2.5% deposit with a 20% government equity loan and a 77.5% mortgage. The scheme exclusively covers any eligible new build home, with final price caps and rules expected at the October 2026 Budget.
Saving for a deposit remains one of the biggest hurdles when trying to get onto the property ladder.
A proposed government scheme called Your First Home aims to lower that barrier by reducing the minimum personal deposit required to just 2.5%.
However, because full details are being finalised ahead of the October 2026 Budget, it is important to understand how the scheme works, what remains unconfirmed, and what it will cost you over the long term.
What is the Your First Home scheme?
Your First Home is a proposed government-backed equity loan scheme for first-time buyers in England.
Instead of saving a standard 5% or 10% deposit, you contribute 2.5% of the property’s value. The government provides an equity loan of 20%, and you secure a mortgage to cover the remaining 77.5%.
Example: Buying a £300,000 Home
- Your 2.5% deposit: £7,500
- Government 20% equity loan: £60,000
- 77.5% mortgage: £232,500
Is the 20% equity loan free money?
No. The government’s contribution is an equity loan, not a cash grant.
Because it is an equity loan, the government owns a percentage stake in your property's value. If your home goes up in value, the amount you owe on the loan increases proportionally.
While the government has indicated there will be an initial interest-free period, you will eventually pay interest fees. The loan must be repaid when you sell the property, remortgage, or reach the end of the loan term.
Key Takeaway: Always evaluate the total long-term cost of the interest and eventual loan repayment - not just the upfront deposit amount.
Who is eligible, and what properties qualify?
The scheme is specifically tailored for first-time buyers in England who can afford monthly mortgage payments but lack a large cash deposit.
- New-Build Homes Only: You can only use the scheme on newly built homes from approved housebuilders taking part in the program. Participating developers are expected to pay a contribution fee to help fund the scheme.
- England Only: Housing policy is devolved. Scotland, Wales, and Northern Ireland maintain their own separate homeownership assistance programs.
- Pending Criteria: Strict eligibility rules will apply once launched, including household income caps, maximum regional property price limits, and mortgage affordability checks.
Note on London: Under previous government equity loan schemes, buyers in Greater London could access an increased equity loan (up to 40%) due to higher regional house prices. Whether Your First Home will feature a higher loan tier for London has not yet been confirmed.
We're pleased to see a new government incentive for first-time buyers in England. Saving for a deposit is one of the biggest barriers to home ownership but, the Your First Home scheme is designed to help more people overcome that hurdle. It could make buying a new-build home a reality.Mark Hincks, Director at newhomesforsale.co.uk
Your First Home vs. First Homes: What’s the difference?
Because the names are almost identical, buyers could confuse these two programs:
| Feature | Your First Home (New Scheme) | First Homes (Existing Scheme) |
|---|---|---|
| How it works | 2.5% deposit + 20% government equity loan | Buy the property at a 30%-50% discount off market value |
| Property Price | You pay 100% of the market price (partially via loan) | The property price itself is permanently discounted |
| Loan Repayment | Must repay the 20% equity loan later | No equity loan to repay; discount stays with the property when sold |
How does it affect monthly mortgage payments and Stamp Duty?
Monthly Payments
Because the 20% equity loan covers a fifth of the purchase price, your required mortgage is significantly smaller compared to a standard 95% mortgage.
On a £300,000 home:
- Standard 5% Deposit: Requires a £285,000 mortgage.
- Your First Home (2.5% Deposit): Requires a £232,500 mortgage.
A lower mortgage balance generally means lower monthly mortgage payments during the initial loan period, though you must budget for government loan fees once the interest-free period expires.
Stamp Duty Land Tax (SDLT)
The scheme does not alter existing first-time buyer Stamp Duty relief in England:
- Up to £300,000: 0% Stamp Duty.
- £300,001 to £500,000: 5% Stamp Duty charged only on the portion above £300,000.
- Over £500,000: Standard SDLT rates apply (no first-time buyer relief).
(An eligible first-time buyer purchasing a £300,000 home under this scheme would pay £0 in Stamp Duty).
What are the next steps for buyers?
The government is expected to publish final scheme rules, income limits, price caps, and participating lenders and housebuilders at the October 2026 Budget.
Click here to sign up for updates about the scheme.
Until then:
- Keep Saving: Continue building your deposit and emergency funds. A larger deposit always opens up better mortgage interest rates.
- Account for Upfront Costs: Remember that buying a home involves additional expenses beyond the deposit, including conveyancing legal fees, surveys, mortgage arrangement fees, and moving costs.
- Check Existing Options: Explore current savings boosters like the Lifetime ISA (LISA), which offers a 25% government bonus (up to £1,000/year) on savings used toward a first.
Disclaimer
newhomesforsale.co.uk is a property portal and not a financial advisor, mortgage broker or mortgage lender. Always seek independent financial advice before making significant decisions about your money, mortgages or purchasing a property.
All information included in our articles is accurate to the best of our knowledge at the time of publication. However, any references to dates, prices and availability are subject to change without notice.
Please note that stock images used on this website are licensed from Canva.com.
Publish date 29th September, 2026
Reading time: 3 minutes
Written by Heather Bowles
