First-Time Buyer Schemes 2026: LISA, Freedom to Buy, Shared Ownership

Government Schemes for First-Time Buyers in 2026

There are several government-backed schemes designed to help first-time buyers get onto the property ladder. These schemes offer financial help, lower deposits, or part-ownership options that make buying more accessible.

This guide explains how each works, who's eligible, and what the reality looks like compared to traditional mortgages.

The Lifetime ISA (LISA)

The Lifetime ISA is arguably the most generous scheme currently available. The government gives you a 25% bonus on your savings.

How It Works

• You save up to £4,000 per year
• The government adds 25% bonus, up to £1,000 per year
• You can use the money to buy your first home (property up to £450,000)
• The account must be open for at least 12 months before you use it

Who's Eligible

• Aged 18 to 39 (must open before age 40)
• First-time buyer or retirement saver
• UK resident

The Catch

If you withdraw money for any reason other than buying your first home or retiring at 60, you lose the 25% government bonus plus pay a 25% penalty on withdrawal. This can mean getting back less than you put in.

For a complete guide, see our Lifetime ISA Guide.

Shared Ownership Schemes

Shared Ownership allows you to buy a percentage of a property (typically 25 to 75%) and rent the remaining percentage from a housing association.

How It Works

• You buy a percentage stake (e.g., 50%) of a property
• You pay a mortgage on your percentage
• You pay rent on the percentage you don't own
• Over time, you can buy more shares ("staircasing")
• Eventually you can own 100%

Typical Scenario

Property value: £300,000. You buy 50% for £150,000 and get a £120,000 mortgage (80% LTV of your share). You pay rent on the remaining 50% (roughly £600 to £800/month depending on location).

Who's Eligible

• First-time buyers (or existing homeowners in some regions)
• Household income below £80,000 (varies by region)
• Cannot afford to buy 100% of property

Advantages

• Lower deposit required, you only need 5 to 10% of your percentage stake
• Smaller mortgage amount
• Can buy more shares later when finances improve

Disadvantages

• You pay rent on the share you don't own, can feel expensive
• Limited properties available
• Rent can increase with inflation
• Selling can be complicated (housing association approval required)
• Mortgage availability on shared ownership properties can be limited

Freedom to Buy (the permanent 5% deposit scheme)

In July 2025 the UK government made the previously-temporary Mortgage Guarantee Scheme permanent and rebranded it Freedom to Buy. It guarantees a portion of 91-95% LTV mortgages for participating lenders, making 5% deposit mortgages much more widely available across major UK lenders.

How It Works

• Available to first-time buyers AND home movers (wider than Help to Buy was)
• Properties up to £600,000
• You still need a 5% deposit, this is NOT a deposit grant
• You apply for a normal mortgage at a participating lender; the guarantee operates in the background
• Most major UK lenders take part: Halifax, Lloyds, NatWest, Santander, Barclays, HSBC, Nationwide, Virgin Money

For a complete guide, see our Freedom to Buy guide.

First Homes Scheme

The First Homes Scheme remains active in England, offering selected new-build homes at a 30-50% discount from market value, reserved for first-time buyers.

How It Works

• 30-50% discount on selected new builds, England only
• The discount stays with the property forever, resold at the same discount to future eligible buyers
• Household income cap: £80,000 (£90,000 in Greater London)
• Must take a mortgage for at least 50% of the discounted price (not for cash buyers)
• Government pledged 10,000+ properties added per year

Right to Buy (for council tenants)

If you're a council tenant, Right to Buy may still be open to you, but the rules tightened significantly in 2024-25. You now need 10 years of public-sector tenancy (was 3), maximum cash discounts are £16,000-£38,000 by region (was up to £127,000 in London), and newly-built social housing is exempt for 35 years.

Schemes that have CLOSED

Two big schemes have closed that you may still see referenced online, they're no longer available to new applicants:

• Help to Buy Equity Loan, closed to new applicants October 2022 in England; final completions March 2023. Existing borrowers continue under original terms; new buyers should use Freedom to Buy instead.
• Help to Buy ISA, closed to new applicants November 2019. Existing holders can save until 30 November 2029 and claim the 25% bonus by 1 December 2030.

Comparing the Schemes: When to Use Each

Can You Combine Schemes?

You can often combine multiple schemes:

• Lifetime ISA + traditional mortgage: Use LISA bonus as part of your deposit, then get a traditional mortgage for the remainder
• Shared Ownership + other support: Buy your shared stake using a mortgage, potentially topped up with Help to Buy grants if available
• Lifetime ISA on a Shared Ownership purchase: Your share counts as "first home", so LISA applies

The Future of Schemes: What's Changing

Lifetime ISA

The government has announced plans to close the Lifetime ISA to new applicants from April 2028. A replacement scheme focused solely on first-time buyers is expected, but details remain subject to consultation.

Help to Buy Schemes

Most national Help to Buy schemes have already closed. Regional variations continue, but with patchy coverage. There's no sign of a major new scheme launching in 2026.

Key Takeaways

• Lifetime ISA offers 25% free money, use it if you're eligible and can wait 12 months
• Shared Ownership reduces upfront cost but involves ongoing rent payments
• Help to Buy schemes vary by region, check what's available to you
• Combining schemes (LISA + traditional mortgage) is often optimal
• Lifetime ISA closes to new applicants in 2028 (likely)
• Traditional mortgages with larger deposits often offer simpler, clearer paths than scheme combinations