Saving enough to buy your first home can be difficult, particularly when house prices and living costs change while you are saving.
The government’s new Your First Home scheme could reduce the deposit needed by some first-time buyers in England. It is expected to support deposits as low as 2.5%, alongside a 20% government-backed equity loan.
The scheme has not yet been finalised. There are still important details we need to see before buyers can know whether they will qualify and whether it will be right for them.
Key takeaways
- Deposit: Expected to be as low as 2.5%
- Government equity loan: Expected to cover 20% of the property value
- Property: New-build homes only, bought from participating developers
- Location: England only
- Who: First-time buyers, subject to eligibility rules still to be confirmed
- Next update: Further details are due at the Budget on 28th October 2026
What is the Your First Home scheme?
Your First Home is a proposed low deposit scheme for first-time buyers in England. It is expected to support a deposit as low as 2.5%, alongside a 20% government-backed equity loan, on a new-build property bought from a participating developer.
A new-build means a newly constructed home that has not previously been lived in.
The government equity loan would represent 20% of the property’s value. This would reduce the amount the buyer needs to borrow through their mortgage.
The equity loan will have an initial interest-free period. We don’t yet know how long that period will last or what interest, fees or repayment terms will apply afterwards.
Why could a 2.5% deposit make a difference?
For many first-time buyers, saving enough for a deposit is one of the biggest barriers to buying.
Take a £250,000 property. A 10% deposit would mean saving £25,000. A 5% deposit would mean £12,500.
At 2.5%, the deposit would be £6,250.
That could significantly reduce the amount a first-time buyer needs to save before purchasing.
The 20% government equity loan could also reduce the size of the mortgage required from a lender. Based on the structure announced so far, the mortgage would represent 77.5% of the property’s value. This is known as the Loan-to-Value, or LTV.
There is an important distinction. The government equity loan is still money that will need to be repaid under terms that have not yet been confirmed. A buyer could therefore have a smaller mortgage, but that does not necessarily mean they have less debt overall.
What could a 2.5% deposit look like?
Based on the structure announced by the government, here are three simple examples:
So, under the proposed Your First Home structure, a buyer purchasing a £200,000 home would need to find £5,000 for their deposit rather than £10,000 for a standard 5% deposit.
These examples are illustrations only. Buyers will still need to meet the mortgage lender’s affordability and lending criteria, as well as the final Your First Home eligibility rules.
Is Your First Home replacing the Help to Buy scheme?
No, not officially.
The old Help to Buy Equity Loan scheme closed in England in 2023. Your First Home is a new scheme and will have its own rules.
There are similarities. Both use a government equity loan to support eligible buyers purchasing new-build homes.
This means people looking online for a new Help to Buy scheme or Help to Buy replacement may come across Your First Home. However, buyers should not assume the rules from Help to Buy will carry over to the new scheme.
We need to wait for the final Your First Home terms before making detailed comparisons.
What don’t we know about Your First Home yet?
Several important details are still to be confirmed.
We know there will be a household income cap and local property price caps, but the government has not yet published the figures.
We also don’t yet know:
- The exact launch date
- How long the interest-free period will last
- What interest or charges could apply afterwards
- Exactly how and when the equity loan will need to be repaid
- The complete eligibility rules
- Which developers will participate
- How buyers will find participating developments
- Whether a Lifetime ISA can be used alongside the scheme
The government will provide further details at the Budget on 28th October 2026, including costs and implementation timescales.
Expert insight
Michael Thompson, mortgage broker with 28 years’ experience and Managing Director of Key Solutions Mortgage Brokers, said:
“I think this is a really positive announcement for first-time buyers. We speak to plenty of people who can comfortably afford a mortgage but find that saving a large enough deposit is what holds them back. If a 2.5% deposit makes buying a home achievable sooner, that could make a real difference.
Of course, we still need to see the detail, particularly around eligibility and how the equity loan will be repaid. But anything that gives first-time buyers another realistic route into home ownership is something I’m pleased to see.”
What are the potential advantages and drawbacks of Your First Home?
Based only on what has been announced so far, there are some clear points for buyers to consider.
Potential advantages
- A deposit as low as 2.5% could reduce the amount buyers need to save upfront.
- A 20% equity loan could reduce the mortgage required from a lender.
- The equity loan will have an initial interest-free period.
- It could provide another option for first-time buyers struggling to build a larger deposit.
Points to consider
- The government equity loan will still need to be repaid.
- We don’t yet know the repayment terms or what happens after the interest-free period.
- The scheme will only apply to qualifying new-build properties.
- Household income and local property price caps will apply.
- Buyers will need to use a developer participating in the scheme.
- Buyers will still need to satisfy their mortgage lender’s requirements.
Until the final rules are published, it isn’t possible to say whether Your First Home will be suitable for an individual buyer.
Can I use a Lifetime ISA with Your First Home?
We don’t know yet.
A Lifetime Individual Savings Account, usually called a Lifetime ISA or LISA, currently allows eligible savers to contribute up to £4,000 each tax year. The government adds a 25% bonus, worth up to £1,000 a year.
Lifetime ISA savings can currently be used towards an eligible first home costing £450,000 or less.
However, the government has not yet confirmed whether a Lifetime ISA can be combined with Your First Home. Buyers should therefore wait for the final scheme rules before assuming they can use both together.
What other low deposit schemes are available to first-time buyers?
Your First Home won’t be the only route to buying with a smaller deposit.
95% mortgages
A 95% mortgage can allow an eligible buyer to purchase with a 5% deposit. Unlike Your First Home, there is no government equity loan for the buyer to repay.
Shared Ownership
Shared Ownership allows eligible buyers to purchase a share of a property and pay rent on the remaining share.
This works differently from Your First Home because you don’t initially own 100% of the property.
First Homes
The existing First Homes scheme can allow eligible first-time buyers in England to purchase qualifying homes at a discount of at least 30% against market value.
Despite the similar names, First Homes and Your First Home are different schemes.
The right option will depend on your income, savings, mortgage affordability and the type of property you want to buy.
How should I prepare for the Your First Home launch?
You don’t need to wait for the final scheme rules to start preparing to buy your first home.
1. Keep building your deposit. Even if you eventually qualify for a 2.5% deposit, additional savings could help cover other buying costs and give you more mortgage options.
2. Check your credit files. Make sure the information held about you is accurate and address any errors before applying for a mortgage.
3. Review your finances. Look at your regular commitments and think carefully before taking on unnecessary new borrowing.
4. Understand how much you could borrow. An early mortgage conversation can help you understand your potential budget and whether your current plans are realistic.
5. Don’t rely on Your First Home yet. The scheme has been announced but the final eligibility, costs and launch timetable have not been published.
Your First Home could become an important low deposit scheme for first-time buyers, particularly for people who can afford mortgage repayments but are finding it difficult to save a 5% or 10% deposit.
For now, the sensible approach is to prepare your finances and wait for the confirmed rules on 28th October 2026.
Not sure what you could afford?
You don’t need to wait for Your First Home to be launched to understand your mortgage position.
Our advisers can look at your income, deposit and circumstances and help you understand how much you could potentially borrow. Speak to a mortgage adviser or try our free mortgage borrowing calculator.
Your First Home FAQs
How do I get on the property ladder?
Start by understanding how much you can realistically afford, how much deposit you have and approximately how much you could borrow. Speaking to a mortgage broker early can help you understand the mortgages and first-time buyer schemes available to you.
How do I get on the property ladder with a small deposit?
Several options can help eligible buyers purchase with smaller deposits. Your First Home is expected to support deposits as low as 2.5%, while 95% mortgages can allow eligible buyers to purchase with a 5% deposit.
Is there a low deposit scheme for first-time buyers?
Yes. Existing options include 95% mortgages and Shared Ownership. The proposed Your First Home scheme could provide another option, supporting a deposit as low as 2.5% alongside a 20% government-backed equity loan.
Can I buy a house with a 2.5% deposit?
it’s possible but the current options are very limited. We expect the Your First Home Scheme to open up this option to many more people.
Can I use a Lifetime ISA with the Your First Home scheme?
This has not yet been confirmed. Lifetime ISA savings can currently be used towards an eligible first-home purchase costing £450,000 or less, but the government has not confirmed whether they can be combined with Your First Home.
When will the Your First Home scheme be confirmed?
Further details are due at the Budget on 28 October 2026. The government says costs and implementation timescales will be announced then.
Is the Your First Home scheme only for new builds?
Yes, based on the announcement so far. Your First Home is intended for first-time buyers purchasing a new-build property from a developer signed up to the scheme.
Is Your First Home the new Help to Buy scheme?
No. The previous Help to Buy Equity Loan scheme closed in England in 2023. Your First Home has similarities because it also uses a government equity loan, but it is a separate scheme and its final terms have not yet been confirmed.
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