Published 28 September 2026 | By FJP Investment Editorial Team

The government has announced a new first-time buyer scheme expected to allow eligible purchasers in England to buy a new-build home with a deposit of just 2.5%, supported by a government-backed equity loan of up to 20%.

The Your First Home scheme is intended to help people who have a regular income but cannot save the large deposit normally required to purchase a property.

It could significantly reduce the initial cash barrier facing first-time buyers. On a £230,000 home, a 2.5% deposit would amount to £5,750.

However, the scheme is not yet open and several important details remain unconfirmed.

The government has said its final design, cost and implementation timetable will be announced at the Budget on 28 October 2026. Household-income limits and local property-price caps will also apply.

Potential buyers should therefore distinguish between what has been announced and what still needs to be confirmed.

What is the Your First Home scheme?

Your First Home is a proposed government-backed equity-loan scheme for first-time buyers purchasing new-build properties in England.

Under the structure announced so far:

• Buyers are expected to need a deposit of at least 2.5%;
• The government could provide an equity loan worth up to 20% of the property’s value;
• The property must be a new-build home;
• The developer must be participating in the scheme;
• The equity loan will have an initial interest-free period;
• Household-income limits will apply;
• Local property-price caps will restrict which homes qualify; and
• Participating developers will be expected to contribute towards the scheme’s costs.

The programme will apply in England. Separate housing policies operate in Scotland, Wales and Northern Ireland.

The government says the support will be targeted at people who would otherwise be unable to afford their first home, particularly those without financial assistance from the “bank of mum and dad”.

How would the 2.5% deposit work?

A 2.5% deposit is half the 5% minimum contribution required under the former Help to Buy equity-loan scheme.

If the announced percentages are confirmed, the indicative purchase structure could look like this:

• £230,000 property: £5,750 deposit, equity loan of up to £46,000 and a remaining balance of £178,250;
• £300,000 property: £7,500 deposit, equity loan of up to £60,000 and a remaining balance of £232,500; and
• £400,000 property: £10,000 deposit, equity loan of up to £80,000 and a remaining balance of £310,000.

These examples are illustrative. They assume a full 20% equity loan and do not include legal fees, mortgage costs, surveys, removals, insurance or any applicable taxation.

They also do not mean that properties at all three prices will qualify. The local property-price caps have not yet been published.

On a straightforward reading of the announced figures, a buyer contributing 2.5% and receiving a 20% equity loan would still need to fund the remaining 77.5%, normally through a repayment mortgage.

The final funding structure and lender requirements must be confirmed at the Budget.

Who will qualify for Your First Home?

The government has confirmed that the scheme will target first-time buyers purchasing new-build homes from participating developers in England.

It has also confirmed that household-income limits and local property-price caps will apply.

However, the actual figures have not been announced.

The government must still clarify:

• The definition of a first-time buyer;
• Whether every person named on a joint purchase must be a first-time buyer;
• The household-income cap;
• The property-price cap in each area;
• Any residency or immigration requirements;
• Whether different terms will apply in London;
• Whether Lifetime ISA savings can be used alongside the scheme;
• How buyers will demonstrate that they could not purchase without assistance;
• Which developers and mortgage lenders will participate; and
• Whether the number of available equity loans will be limited.

Applicants will still need to satisfy a mortgage lender’s affordability and credit requirements.

A smaller deposit does not automatically mean that someone can borrow the remaining amount. Income, existing debt, regular expenditure, credit history and mortgage rates will continue to determine how much a lender is prepared to advance.

Is the equity loan free money?

No. An equity loan is not the same as a grant, cashback payment or permanent discount.

The government will hold a financial interest in the property which must eventually be repaid.

The previous Help to Buy scheme required borrowers to repay the same percentage of the property’s current market value as they originally borrowed. If the property increased in value, the amount owed also increased. If its value fell, the repayment amount could fall, subject to the scheme’s rules and costs.

For example, if Your First Home retains that model and a buyer receives a 20% equity loan on a £300,000 property, the initial equity loan would be £60,000.

If the home were subsequently valued at £350,000, a 20% repayment would be £70,000. If it were valued at £250,000, the equivalent share would be £50,000.

This example illustrates how equity lending normally operates. The government has not yet published the final valuation, repayment or partial-redemption rules for Your First Home.

Buyers must examine those rules carefully once they become available.

How long will the equity loan be interest-free?

The official announcement promises an “initial interest-free period” but does not specify its length or what charges will apply afterwards.

Further details are expected to cover:

• The length of the interest-free period;
• The interest rate charged afterwards;
• Whether that rate will increase annually;
• Any monthly management fee;
• The maximum loan term;
• When full repayment becomes compulsory;
• Whether borrowers can repay the loan in stages; and
• The valuation and administration costs involved in repayment.

These details will materially affect the long-term cost.

A scheme that makes a property affordable at the point of purchase can still create a substantial future liability if the home rises in value or interest charges increase after the initial period.

Is Your First Home the same as Help to Buy?

It is a new scheme, but it clearly follows the equity-loan structure previously used by Help to Buy.

Help to Buy allowed qualifying purchasers to buy eligible new-build homes with a 5% deposit and a government equity loan generally worth up to 20% of the purchase price. A higher limit was available in London.

The scheme supported 387,091 property purchases between 2013 and 2023, including 328,242 purchases by first-time buyers.

A recently published government-commissioned evaluation of Help to Buy estimated that it generated £25.1 billion in net social value over its lifetime.

FJP Investment examined those findings in our earlier article asking whether Help to Buy could return. At that time, no replacement had been announced. The government’s position has now materially changed.

Your First Home is expected to differ from the previous scheme through:

• A lower potential deposit of 2.5%;
• Household-income restrictions;
• Locally determined property-price caps;
• More explicit targeting of buyers unable to purchase without assistance; and
• A financial contribution from participating developers.

The complete comparison cannot be made until the Budget documents and buyer guidance are published.

How is it different from the First Homes scheme?

Your First Home should not be confused with the existing government programme called First Homes.

First Homes allows qualifying buyers to purchase selected properties for at least 30% below their market value. That percentage discount remains attached to the property when it is sold to another eligible buyer.

Your First Home is an equity-loan proposal. The purchaser would buy the property with assistance from a government financial stake that must subsequently be repaid.

The names are similar, but the ownership and repayment arrangements are fundamentally different.

How is it different from a 95% mortgage?

The government’s permanent Mortgage Guarantee Scheme supports the availability of mortgages requiring deposits as low as 5%.

Under that programme, the buyer still takes out a mortgage covering up to 95% of the property’s value. The government guarantee protects the lender against part of its potential loss; it does not give the government an equity share in the buyer’s home.

Your First Home would operate differently.

The buyer would provide a smaller deposit, receive a government equity loan and arrange a mortgage for the remaining balance. The equity loan should reduce the amount borrowed through the main mortgage, but it creates a separate financial obligation linked to the property.

Neither structure is automatically cheaper in every circumstance. The mortgage rate, equity-loan charges, property performance and length of ownership all matter.

Why is the government introducing the scheme now?

Saving a deposit remains one of the largest obstacles confronting first-time buyers.

Someone attempting to assemble a 10% deposit on a £300,000 property needs £30,000 before legal fees and other purchasing costs are considered. Reducing the required deposit to 2.5% would lower that amount to £7,500.

The policy is also designed to stimulate the new-build housing market.

The government says developers face challenging conditions caused by rising construction costs and wider economic pressures. Supporting buyer demand could give housebuilders greater confidence that newly completed properties will sell.

The Home Builders Federation has welcomed the announcement, while calling for the programme to work across different regions and for housebuilders of all sizes.

Participating developers will be expected to make a contribution towards the scheme’s costs. The size and structure of that contribution have not yet been disclosed.

Could the scheme increase new-build prices?

Any policy that increases purchasing power without producing enough additional homes can place upward pressure on prices.

The recent Help to Buy evaluation estimated that the former scheme increased housing supply in some areas. However, it also found that Help to Buy properties carried an estimated additional price premium of approximately 0.9% compared with other new-build homes.

That does not establish what will happen under Your First Home.

The result will depend upon the scheme’s scale, geographical targeting, price caps, developer participation and whether additional demand produces genuinely additional construction.

Local price caps could limit the amount buyers pay. Developer contributions could also return part of the benefit to the taxpayer rather than allowing it to flow entirely into land or property values.

Nevertheless, buyers should compare the price of an eligible property with similar new-build and second-hand homes. Scheme eligibility does not by itself establish that a property represents good value.

What are the potential risks for buyers?

The reduction in the initial deposit is likely to attract significant interest, but buyers must consider the complete financial commitment.

Potential issues include:

• Mortgage affordability: buyers must still qualify for the main mortgage and maintain the repayments;
• Equity-loan repayment: the amount owed may increase if the property rises in value;
• Future interest charges: the cost after the interest-free period has not been confirmed;
• New-build pricing: some newly built homes sell at a premium to comparable existing properties;
• Limited choice: only properties from participating developers will qualify;
• Negative equity: a small cash deposit provides a limited buffer if the property’s value falls;
• Service charges: flats and some housing developments can carry substantial recurring charges; and
• Resale considerations: local supply, the condition of the development and future buyer demand will affect the ability to sell.

A buyer should not select a property solely because government assistance is available.

The property’s location, construction quality, warranty, tenure, service charges, management arrangements and realistic resale prospects remain essential considerations.

What could Your First Home mean for the UK property market?

The most immediate effect is likely to be concentrated in the new-build sector.

If the scheme attracts significant demand, participating developers could experience higher reservation rates and greater confidence in bringing forward future phases.

That may support construction activity, development finance and demand for suitable land.

However, the wider housing market remains highly regional. FJP Investment’s recent analysis found that UK housing supply has reached a 12-year high while buyer enquiries are 9% lower than a year ago.

A government-backed scheme could strengthen one section of that market without producing the same effect across older homes, luxury property, buy-to-let investments or every geographical area.

The final income and price caps will determine where its influence is most noticeable.

What does the scheme mean for property investors?

Your First Home is intended to support owner-occupiers purchasing their first property. It is not being presented as a buy-to-let or property-investment programme.

Investors should not assume that they will qualify or that properties purchased through the scheme could be rented out.

Its relevance to investors is primarily indirect.

Greater demand for eligible new-build homes could improve sales rates for developers, influence construction pipelines and affect development-land values. It could also increase competition within particular price bands.

Those effects will depend on the availability of government funding, the number of participating developers and whether the scheme generates additional transactions rather than bringing forward purchases that would have occurred anyway.

Can overseas buyers use Your First Home?

The government has not yet published the residence, nationality or immigration requirements.

International purchasers should not assume that they will qualify simply because they have never previously owned property in the United Kingdom.

The final definition of a first-time buyer may take account of property owned anywhere in the world, as other UK tax and housing rules frequently do.

The programme is also intended to help people purchase a home to occupy, rather than overseas investors acquiring UK property for rental or occasional use.

Detailed eligibility guidance should be checked once it is published.

When will the Your First Home scheme open?

The government will confirm the scheme at the Budget on Wednesday, 28 October 2026.

Costs, implementation dates, income limits and local property-price caps are all expected at that stage.

Media reports indicate that pre-registration could open before the end of 2026, but the official GOV.UK announcement currently says that the implementation timetable will be provided at the Budget.

There is therefore no live application portal at present.

First-time buyers should be cautious about any developer or third party claiming to offer guaranteed access before the official rules and registration process are published.

What should prospective buyers do now?

There is no need to apply immediately because applications are not yet open.

Potential buyers can use the period before the Budget to:

• Continue building their deposit and emergency savings;
• Check their credit reports for incorrect information;
• Review existing loans and recurring financial commitments;
• Gather evidence of income and employment;
• Research realistic mortgage affordability;
• Compare new-build and existing properties in their chosen locations; and
• Wait for the official eligibility and repayment rules before making a non-refundable commitment based on the scheme.

A 2.5% deposit may reduce the time needed to save, but it does not remove the need for legal advice, an appropriate survey, mortgage affordability checks or careful examination of the equity-loan agreement.

Final thoughts

Your First Home represents the most significant new first-time buyer announcement since the closure of Help to Buy.

The headline proposition is powerful: eligible purchasers could buy a new-build home with a deposit of only 2.5% and a government-backed equity loan worth up to 20%.

For someone purchasing a £230,000 property, that could reduce the required deposit to £5,750.

But the headline is not the complete financial picture.

The equity loan must eventually be repaid, mortgage affordability still applies and the government has not yet confirmed the income limits, local price caps, interest arrangements or launch timetable.

The Budget on 28 October will determine whether Your First Home becomes a genuinely targeted route into home ownership and how widely it can be used.

Until then, first-time buyers should treat the scheme as a confirmed policy proposal whose final operating rules are still being developed—not as an application-ready offer.

This article is provided for general information and market commentary only. It does not constitute financial, mortgage, investment, property, legal or tax advice or a recommendation to purchase any property or use any government scheme. FJP Investment acts solely as an introducer and does not provide advice, assess suitability, arrange mortgages, conduct due diligence on a reader’s behalf, manage investments or hold client money. Property values can fall as well as rise, mortgage and equity-loan obligations must be repaid, and purchasers could lose some or all of their initial capital. Appropriate independent professional advice should be obtained where required.