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Your First Home: the new scheme for first-time buyers
The new Your First Home scheme lets first-time buyers in England buy a new build with a 2.5% deposit and a 20% government equity loan. Here is what we know so far.
The government has announced a new scheme for first-time buyers in England. It is called Your First Home. It lets you buy a new-build home with a 2.5% deposit, backed by a 20% government equity loan.
The scheme was announced on 26 September 2026. The full details will come in the Autumn Budget on 28 October 2026. Here is what we know so far, what we don’t, and what you can do now.
How does Your First Home work?
You pay for your home in three parts:
- Your deposit: at least 2.5% of the price
- A government equity loan: 20% of the price
- A mortgage: the rest, which is around 77.5%
Because the government loan sits behind your mortgage, the lender only needs to lend 77.5% of the price. Lenders charge less for a 77.5% mortgage than for a 95% one. The government says this could save buyers hundreds of pounds a month.
The equity loan is interest free for a set period at the start. We don’t yet know how long that period lasts.
A worked example
| Part | Share of price | On a £250,000 home |
|---|---|---|
| Your deposit | 2.5% | £6,250 |
| Government equity loan | 20% | £50,000 |
| Your mortgage | 77.5% | £193,750 |
| Total | 100% | £250,000 |
This is an example only. The real price caps and loan terms will come at the Budget.
Who can use it?
Based on what the government has said so far, you will need to:
- Be a first-time buyer
- Buy in England
- Buy a new-build home from a builder that has signed up
- Have a household income below a set cap
- Buy a home priced below the local price cap
The scheme does not cover Wales, Scotland or Northern Ireland. Wales has its own Help to Buy scheme, which runs until 31 March 2027.
What we don’t know yet
The Chancellor will set out the rest at the Budget on 28 October. Key gaps right now are:
- The local price caps in each area
- The household income cap
- How long the interest-free period lasts
- What the loan costs once that period ends
- When you can first buy a home through the scheme
The government expects pre-registration to open by the end of 2026. We will update this post once the Budget confirms the details.
Things to think about first
A small deposit makes buying easier, but an equity loan is still a debt. Keep these points in mind:
- You may pay back more than you borrow. Past equity loans were repaid as a share of the home’s value, not the sum borrowed. If your home goes up in value, so does what you owe.
- The loan won’t stay free. Once the interest-free period ends, you will start to pay fees or interest on it.
- New builds only. You can’t use it on an older home, and new builds can lose value in the first few years.
- You start with little equity. With 2.5% down, a small fall in prices could leave you owing more than your home is worth. This can make it harder to move or remortgage.
- Your choice of builders may be limited. Only builders who sign up can sell through the scheme.
None of this means the scheme is a bad idea. It means you should plan for the whole life of the loan, not just the first few years.
What you can do now
You can’t apply yet, but you can get ready:
- Start saving towards your 2.5% deposit, plus fees for legal work and moving.
- Check your credit file and fix any errors.
- Look at new-build sites in the areas you like.
- Work out a monthly budget you can live with.
- Speak to a mortgage adviser about what you could borrow.
At Mortgage & Finance Arena, we help first-time buyers across England. We can tell you if the scheme suits you, or if another route would work better. Book a free chat with our team to get started.
Your home may be repossessed if you do not keep up repayments on your mortgage.
FAQs
What is the Your First Home scheme?
It is a new government scheme for first-time buyers in England. You put down 2.5%, the government lends 20% as an equity loan, and a mortgage covers the rest.
Can I use it on any home?
No. It only covers new-build homes from builders who join the scheme.
Is the equity loan free?
It is interest free for a set period at the start. The length of that period and the cost after it are not yet known.
When does it start?
The Budget on 28 October 2026 will confirm the timeline. Pre-registration is expected to open by the end of 2026.
Is it the same as Help to Buy?
It works in a similar way to the old Help to Buy equity loan, which closed in England in 2023. The main change is the lower 2.5% deposit.
Can I use it in Wales or Scotland?
No. The scheme is for England only.