Last reviewed and updated by Darren Shepherd: September 2026
Your First Home is a new government scheme for first-time buyers in England. You put down a 2.5% deposit, the government lends you up to 20% of the price as an equity loan, and a normal mortgage covers the other 77.5%. It is for new-build homes only, and the full rules arrive in the Budget on 28 October 2026.
These are the details we know now. The full details will be released in the upcoming Budget on 28 October 2026. Subscribe below to receive further updates as soon as they're announced.
Subscribe for updates →What is the Your First Home scheme?
On Saturday 26 September 2026, the government announced a new equity loan scheme for England called Your First Home. Chancellor John Healey is due to set out the full details at the Budget next month. Announcing it, Prime Minister Andy Burnham said too many young people had given up hope of ever owning a home.
In 36 years in mortgages, the thing I've seen stop more first-time buyers than anything else isn't the monthly payment. It's the deposit. People paying more in rent than a mortgage would cost them, still stuck, because they can't save a lump sum fast enough. This scheme is aimed squarely at that problem, and especially at people who can't lean on the bank of Mum and Dad.
The government has a second aim too. It says the new-build market is facing headwinds from rising construction costs and international economic pressures, and it wants this scheme to give housebuilding a lift.
Your First Home at a glance
How does the 2.5% deposit mortgage work?
Instead of borrowing almost everything from a bank, the purchase is split three ways.
- You put down a deposit of 2.5% of the price.
- The government lends you up to 20% of the price as an equity loan.
- A mortgage lender lends you the remaining 77.5%, subject to their normal checks.
The government loan will be interest free for an initial period. We don't yet know how long that period lasts. The government says buyers could save hundreds of pounds a month compared with a 95% mortgage, because the mortgage itself is smaller.
What that looks like in real numbers
| Home price | 2.5% deposit | 20% loan | 77.5% mortgage |
|---|---|---|---|
| £200,000 | £5,000 | £40,000 | £155,000 |
| £250,000 | £6,250 | £50,000 | £193,750 |
| £300,000 | £7,500 | £60,000 | £232,500 |
| £350,000 | £8,750 | £70,000 | £271,250 |
For context, the average price paid by first-time buyers in England was £245,515 in July 2026, according to the UK House Price Index. A 2.5% deposit on that is around £6,140, compared with roughly £12,280 for a 5% deposit. So the cash you need up front is about halved.
You'll still need money on top of the deposit for things like legal fees, surveys and moving. Budget for those separately.
Calculator: what would you need?
Type in a new-build price to see the split. The second part shows how an equity loan can change in size over time, based on how the old Help to Buy scheme worked. The new scheme's repayment rules haven't been confirmed yet, so treat that part as an illustration only.
Your First Home rough guide calculator
Illustration only, based on the scheme as announced on 26 September 2026.
With a normal 95% mortgage on the same home, you'd need a £12,500 deposit and a mortgage of £237,500.
If it works like Help to Buy: what might you repay?
Help to Buy loans were repaid as a percentage of the home's value at the time, not the amount borrowed. Move the slider to see how that works.
Home worth £275,000, so 20% to repay is £55,000, compared with £50,000 borrowed.
That's £5,000 more than you borrowed.
Who can use the Your First Home scheme?
Here's what the government has confirmed so far.
- First-time buyers only.
- New-build homes only, bought from a developer that has signed up to the scheme.
- England only.
- There will be a household income cap. The figure hasn't been announced.
- There will be local property price caps. Again, no figures yet.
- Developers who join will have to pay a contribution towards the cost.
You'll also still need to pass a mortgage lender's normal affordability checks on the 77.5% mortgage. A smaller deposit doesn't change that. If you're new to all this, my first-time buyer guide walks through the whole process from the start.
What don't we know about Your First Home yet?
Quite a lot, honestly. The headline numbers are out, but the small print isn't. These are the questions I'd want answered before anyone signs up.
- How long the loan stays interest free, and what it costs after that.
- Whether you repay a fixed amount or a percentage of your home's value.
- The exact income cap and price caps, and whether they vary by region.
- Whether London gets a bigger loan, as it did under Help to Buy.
- Whether there's an age limit or a savings limit.
- Which lenders will take part, and their rules.
- The date you can actually complete a purchase using it.
You may see a £600,000 price limit mentioned online. That figure hasn't been confirmed by the government, so I wouldn't rely on it until the Budget.
How does Your First Home compare to Help to Buy?
If this sounds familiar, it should. The Help to Buy equity loan in England worked in a very similar way until it closed in 2023. The table below compares the new scheme with the final version of Help to Buy, which ran from 2021 to 2023.
| Help to Buy (2021 to 2023) | Your First Home (2026) | |
|---|---|---|
| Minimum deposit | 5% | 2.5% |
| Government loan | Up to 20% (40% in London) | Up to 20% (London not confirmed) |
| Your mortgage | At least 75% | 77.5% |
| Property | New-build only | New-build only |
| Who could use it | First-time buyers only | First-time buyers only |
| Price caps | Regional, from £186,100 (North East) to £600,000 (London) | Local caps (figures due at Budget) |
| Income cap | None | Yes (figure due at Budget) |
| Interest free | First 5 years | Yes (length not confirmed) |
| After that | 1.75% of the loan in year 6, rising every April | Not confirmed |
| Repaid as | A percentage of the home's value at the time | Not confirmed |
| Developers pay in | No | Yes |
The Help to Buy lesson people forget
With Help to Buy, the interest-free period ended after five years. In year six, you paid interest of 1.75% on the amount you originally borrowed, and that rate went up every April. On a £40,000 loan, that was £58.33 a month to start with, and none of it reduced the loan itself.
The loan was also repaid as a percentage of what your home was worth. Borrow 20% on a £200,000 home, sell it for £250,000, and you paid back £50,000, not £40,000. It worked the other way too. If the value fell, you paid back less.
We don't know yet whether Your First Home will follow the same rules. But it's the first thing I'll be looking for when the details are published.
Is Your First Home better than a 95% mortgage?
It depends on your situation, and the answer will be clearer once the costs are known. Here's how the two routes compare in principle.
| 95% mortgage | Your First Home | |
|---|---|---|
| Deposit | 5% | 2.5% |
| Property | New or older homes | New-builds from signed up developers |
| Who | First-time buyers and movers | First-time buyers only |
| Borrowing | One mortgage | A mortgage plus a government loan |
| Monthly cost | Higher, as 95% rates usually cost more | Lower at first, while the loan is interest free |
It's also not the only way in with a small deposit. There are Lifetime ISAs and shared ownership, and some lenders will use your rent history instead of a deposit. I covered one of those in my Skipton Track Record guide.
What are the risks of a 2.5% deposit?
A small deposit gets you in the door sooner, but there are trade-offs worth understanding.
- Negative equity. With very little of your own money in the home, a fall in prices could leave you owing more than it's worth. That can make it harder to move or remortgage.
- The new-build premium. New-builds often cost more than similar older homes, and that premium can disappear once you're the second owner.
- Price inflation. Some in the industry worry that extra buying power aimed only at new-builds could push their prices up.
- Leasehold flats. Service charges and ground rent add to the monthly cost, so check them carefully.
- The cost later on. If fees start after the interest-free period, your monthly outgoings will rise. Plan for that from day one.
Not sure what some of these terms mean? My jargon buster explains them in plain English. And the new-build mortgages guide covers what's different about buying a new home.
What happens next with Your First Home?
- 26 September 2026Scheme announced by the government.
- 28 October 2026, the BudgetExpected: income cap, price caps, how long it's interest free, costs and timings.
- By the end of 2026Pre-registration due to open.
- To be confirmedThe date buyers can actually complete a purchase with it.
What you can do right now
- Keep saving. Aim for the 2.5% plus money for fees and moving.
- Check your credit file and make sure you're on the electoral roll.
- Keep an eye on new-build developments near you, and look out for which developers sign up.
- Don't put your plans on hold just for this. We don't know when it will launch, and other options exist today.
- Use my free calculators to get a feel for monthly payments and stamp duty.
I'll break down the final rules as soon as the Budget is announced. Sign up to my newsletter below and it'll land straight in your inbox.
Sources
- GOV.UK: New first-time buyer scheme to be confirmed at Budget
- GOV.UK: Help to Buy: Equity Loan
- GOV.UK: Homebuyers' guide to Help to Buy (2021 to 2023)
- GOV.UK: UK House Price Index, England, July 2026
- ITV News: New Your First Home scheme
This article is for general information and education only. It isn't financial or mortgage advice and doesn't take your personal circumstances into account. Scheme details are based on the government's announcement of 26 September 2026 and may change when the final rules are published. Your home may be repossessed if you do not keep up repayments on your mortgage.