Your First Home scheme: how it works for first-time buyers

The government has officially announced Your First Home, a new scheme designed to help eligible first-time buyers buy a new-build home in England with a smaller deposit and mortgage.

The scheme is expected to open for applications in February 2027, with the first properties expected to be sold under the scheme in April. Some details are still to come, including the full list of property price caps for each local authority area and the full eligibility rules.

Your First Home is designed to reduce the amount some first-time buyers need to save before buying a home. Instead of funding your purchase using just a deposit and mortgage, the scheme adds a government equity loan.

This means your purchase could be made up of three parts: your cash deposit, the government equity loan and your mortgage.

Here’s what you need to know about how the scheme works, how much deposit you could need and what it might mean for your budget.

See what homes you could afford with the Your First Home calculator

How does the Your First Home scheme work?

Eligible buyers will be able to buy a home using:

• a deposit of at least 2.5% of the purchase price
• a 20% government equity loan
• a repayment mortgage from a participating lender to cover the remaining amount

For example, if you were buying a £300,000 home with a 2.5% deposit, your purchase could look like this:

• Your deposit: £7,500
• Government equity loan: £60,000
• Mortgage: £232,500

Having enough for the deposit doesn’t necessarily mean you’ll be able to borrow the mortgage amount you need. Participating lenders will carry out affordability and credit checks before deciding whether to offer you a mortgage.

The full eligibility rules will be published before applications open.

How much deposit do I need for Your First Home?

The minimum deposit is 2.5% of the purchase price, so the amount you’ll need to save will depend on the price of the home you’re buying.

Here are some examples of what different deposit amounts could mean:

Deposit (2.5%)	Illustrative property price	Equity loan (20%)	Mortgage (77.5%)	Illustrative income at 4.5x*
£2,500	£100,000	£20,000	£77,500	£17,222
£3,750	£150,000	£30,000	£116,250	£25,833
£5,000	£200,000	£40,000	£155,000	£34,444
£6,250	£250,000	£50,000	£193,750	£43,056
£7,500	£300,000	£60,000	£232,500	£51,667
£8,750	£350,000	£70,000	£271,250	£60,278
£10,000	£400,000	£80,000	£310,000	£68,889
£11,250	£450,000	£90,000	£348,750	£77,500
£12,500	£500,000	£100,000	£387,500	£86,111

*The income column simply divides the illustrative 77.5% mortgage by 4.5. It isn’t an indication of what a lender could offer you. The amount you can borrow will depend on the lender’s affordability assessment and eligibility criteria.

These figures don’t show the maximum price you could pay under the Your First Home scheme. Local property price caps will apply, and the government says the full list of caps for each local authority area will be published shortly.

For example, a £5,000 deposit represents 2.5% of a £200,000 home. With a 20% equity loan, that would mean a £40,000 equity loan and a £155,000 mortgage.

Similarly, a £7,500 deposit represents 2.5% of a £300,000 home, with a £60,000 equity loan and £232,500 mortgage. The government’s guidance uses this £300,000 example when explaining how the scheme could fund a purchase.

See what homes you could afford with the Your First Home calculator

How much could I afford with Your First Home?

Having enough money for a 2.5% deposit is only part of working out what you could afford.

The amount you can spend on a home will also depend on how much you can borrow through a mortgage, as well as the scheme’s household income limits and the property price cap for the area where you’re buying.

We’ll add further details about local authority property price caps when they are confirmed by the government.

For example, your deposit might equal 2.5% of a particular property price, but you’d still need to qualify for the mortgage required to complete the purchase.

If you know how much you have saved, you can start by looking at the property price your deposit could theoretically support. If you have an idea of what you might be able to borrow, you can instead look at how your mortgage, deposit and potential equity loan could come together.

Who is eligible for the Your First Home scheme?

Your First Home is designed for first-time buyers purchasing a new-build home in England who would struggle to buy without support.

To use the scheme, buyers will normally need to:

• be a first-time buyer
• buy a new-build home in England within the relevant local price cap
• use the property as their main home
• have a total annual household income of £110,000 or less outside London, or £140,000 or less within London
• be able to get a mortgage from a participating lender.

These aren’t yet the complete eligibility rules. The government says full eligibility criteria will be published before applications open.

What are the Your First Home property price caps?

Property price caps will apply to homes bought through Your First Home, and the caps will vary by area.

Importantly, the government hasn’t yet published the full list of caps for every local authority. This is due to be published shortly, but will be based on the local authority’s median average house price.

For now, the government has published these examples:

• Reading: £375,000
• North Devon: £320,000
• Manchester: £355,000
• Middlesbrough: £220,000

Separate London price caps have been announced:

• Inner London: £650,000
• Outer London: £500,000

What falls under inner and outer London are defined under The London Plan 2021.

The examples above aren’t a complete list of price caps across England. You’ll need to check the cap for the local authority where you’re buying once the full list is published.

Which homes can I buy with Your First Home?

Your First Home will support eligible new-build homes from developers participating in the scheme. The home will also need to fall within the relevant local property price cap.

The government says information about participating developers will be made available ahead of launch.

How does the Your First Home equity loan work?

The government equity loan will be worth 20% of the property’s purchase price and will be interest-free for the first 5 years.

For example, the equity loan on a £250,000 home would be £50,000. On a £300,000 home, it would be £60,000.

Interest rates will then be:

• Years 1 to 5: 0%
• Year 6: 1.5%
• From year 7: 3%

Interest payments will be separate from your mortgage payments and won’t reduce the amount you owe on the equity loan. Further information about how these interest payments will be collected will be published before applications open.

The government have shared the below example figures illustrating what monthly repayments could look like under the scheme, and how these might change in years 6 and 7.

Period	Your First Home mortgage	Equity loan interest	Total monthly cost under Your First Home
Years 1 to 5	£1,248	£0	£1,248
Year 6	£1,248	£75	£1,323
From year 7	£1,248	£150	£1,398

What happens if my home’s value changes?

The equity loan is linked to the value of your home.

If it represented 20% of your home’s purchase price when you bought it, you’ll normally repay 20% of your home’s value when you repay the loan, based on an independent valuation.

So, the amount you repay can go up or down as your home’s value changes.

For example, if you bought a £300,000 home using a £60,000 equity loan and the home was later valued at £320,000, 20% of its new value would be £64,000.

If the home was instead valued at £280,000, 20% would be £56,000.

When do I repay the Your First Home equity loan?

The equity loan will normally be repaid when you sell your home. You’ll also be able to repay some or all of it before you sell. An independent valuation may be needed to establish the home’s current market value and how much you need to repay.

There are still some details to come. The government says full repayment guidance will be published before applications open, including:

• minimum repayment amounts
• valuation requirements
• any fees that may apply
• how repayment works when selling or remortgaging

What’s the difference between Your First Home and a standard mortgage?

When you buy a home without an equity loan scheme, you would usually fund the purchase through your own deposit and mortgage.

With Your First Home, a government equity loan provides another part of the funding. An eligible purchase could therefore combine a deposit of at least 2.5%, a 20% equity loan and a repayment mortgage for the remaining amount.

That means a smaller mortgage is required than if you were buying the same home with the same deposit but without the equity loan.

However, the equity loan comes with its own costs and repayment terms, so it’s important to consider these alongside your mortgage.

What other costs do I need to budget for when buying with Your First Home?

Your deposit isn’t the only cost to think about when you’re buying your first home.

Depending on your circumstances and the property, you might also need to budget for costs such as:

• mortgage fees
• survey costs
• conveyancing costs
• stamp duty, if applicable
• moving costs
• costs associated with buying and owning a new-build home.

You’ll also need to think about ongoing costs. The government’s guidance highlights mortgage payments, council tax, insurance, maintenance costs, service or estate charges and the future interest costs of the equity loan.

Your First Home scheme FAQs

• When does Your First Home start?

  The scheme is expected to open for applications in February 2027, with the first homes bought under the scheme from April 2027. More information about eligible homes, participating developers and lenders, and how to apply will be published before applications open.

• Can I use Your First Home if I'm buying with someone else?

  The government hasn’t yet published the full eligibility rules. These are due before applications open, so it’s worth checking the final criteria if you’re planning to buy with someone else.

• Is Your First Home only for new-build homes?

  The scheme is designed to support purchases of eligible new-build homes in England from participating developers.

  More information about eligible homes and participating developers is due before applications open.

• What is the maximum property price for Your First Home?

  The maximum eligible property price will depend on where you’re buying.

  The government has announced caps of £650,000 for inner London and £500,000 for outer London, as well as example caps for Reading, North Devon, Manchester and Middlesbrough. The full list of price caps for each local authority area hasn’t been published yet and is due shortly.

• How much deposit do I need for a £300,000 home with Your First Home?

  With the scheme’s minimum 2.5% deposit, you’d need at least £7,500 for a £300,000 home.

  A 20% equity loan would be £60,000, leaving £232,500 to be funded through a repayment mortgage.

  Your ability to buy the home would still depend on eligibility, the relevant local property price cap and your lender’s affordability and credit checks.

• Do I pay interest on a Your First Home equity loan?

  The equity loan is interest-free for the first 5 years. The interest rate will then be 1.5% in year 6 and 3% from year 7.

  These interest payments are separate from your mortgage and don’t reduce the amount you owe on the equity loan. Further details about collecting interest are due before applications open.

• Can self-employed people use the Your First Home scheme?

  Being self-employed doesn’t stop you using the Your First Home scheme, but you’ll still need to be able to get a mortgage. You can read more about how you’ll be assessed for a mortgage in our guide to getting a mortgage when you’re self employed.

• Do I have to repay the Your First Home equity loan?

  Yes. You’ll normally repay the equity loan when you sell your home, although you’ll also be able to repay some or all of it earlier.

  The amount you repay is linked to how much your home is worth at the time. If your equity loan represented 20% of the purchase price, you’ll normally repay 20% of your home’s value when you repay it, based on an independent valuation.

See what homes you could afford with the Your First Home calculator

Please note: Your home may be repossessed if you do not keep up repayments on the mortgage. Rightmove is not authorised to give financial advice; the information and opinions provided in these articles are not intended to be financial advice and should not be relied upon when making financial decisions. Please seek advice from a regulated mortgage adviser.

Sources:
The London Assembly
Your First Home
2026 Budget, HM Treasury