Your First Home Scheme Explained: What First-Time Buyers Need to Know

Published 26 September 2026. Scheme details have not yet been finalised and are due to be confirmed at the Budget in October 2026. We’ll update this article when they are.

If you’ve been renting and wondering how you’ll ever save a big enough deposit, today’s announcement is worth paying attention to.

The government has announced a new scheme called Your First Home. It’s designed to help first-time buyers in England buy a new-build home with a much smaller deposit than they’d usually need.

Here’s what we actually know so far, what’s still unconfirmed, and what you can do now to be ready.

What has the government confirmed?

According to the official GOV.UK announcement:

• It’s for first-time buyers in England buying a new-build home from a developer that has signed up to the scheme.
• It’s expected to support deposits of 2.5%, alongside a government-backed equity loan of 20% of the property’s value.
• The equity loan will have an initial interest-free period.
• There will be a household income cap and local property price caps, so the scheme is targeted at people who need the help most.
• Full details, including costs and timings, will be set out by the Chancellor at the Budget next month.

What’s still unconfirmed?

Some reports have mentioned a maximum property price, how long the interest-free period lasts and when registration opens. None of these have been confirmed officially yet, so we’d suggest not making plans around them until the Budget. In particular, we don’t yet know:

• The exact income cap and the price caps for our region
• How long the interest-free period lasts, and what charges apply after it
• When and how you can apply
• Which developers will take part

How could the numbers work? An illustrative example

This example is for illustration only. It isn’t a quote, and the final scheme rules may be different.

Imagine a new-build home priced at £200,000:

Compare that with a typical 95% mortgage on the same home, where you’d need a £10,000 deposit and a £190,000 mortgage. A smaller mortgage can mean lower monthly repayments, but whether it’s right for you depends on your circumstances and the final terms of the scheme.

How is an equity loan different from a normal loan?

This is the part people most often misunderstand, so it’s worth being clear.

An equity loan is usually linked to a percentage of your home’s value, not a fixed sum. Under previous schemes like Help to Buy, if you borrowed 20%, you paid back 20% of what the home was worth when you repaid or sold. That means:

• If your home goes up in value, you repay more than you borrowed.
• If it goes down, you repay less.
• Once any interest-free period ends, you’ll normally start paying fees or interest on the loan, which adds to your monthly costs.

We expect Your First Home to work in a similar way, but we’ll confirm once the rules are published.

Your First Home vs Help to Buy: what’s different?

From what’s been announced, the main differences from the old Help to Buy equity loan are the lower minimum deposit (2.5% rather than 5%) and the household income cap. Like Help to Buy, it’s for new builds only and relies on developers signing up. Developers will also be expected to contribute towards the scheme’s costs.

Is it right for everyone?

Not necessarily. A smaller deposit gets you in sooner, but it also means you start with less equity in your home. Things to think about:

• You’ll have two debts to manage: your mortgage and the equity loan.
• Moving or remortgaging can be more involved while the equity loan is in place.
• Other routes may suit you better, such as a standard 95% mortgage, Shared Ownership or other first-time buyer schemes.

That’s where advice matters. We’ll look at all option available to you, not just the headline one.

What can you do now to get ready?

Even before the details are confirmed, there’s plenty you can do:

1. Check your credit file and fix any errors.
2. Keep saving. Even with a 2.5% deposit, you’ll need money for legal fees, surveys and moving costs.
3. Get your paperwork together: payslips, bank statements and ID.
4. Speak to a new build specialist. We can tell you what you might be able to borrow today and let you know as soon as the scheme opens.

Frequently asked questions

What is the Your First Home scheme? A new government scheme in England, announced in September 2026, that is expected to let first-time buyers purchase a new-build home with a 2.5% deposit and a 20% government-backed equity loan.

Can I apply for Your First Home now? Not yet. The government says full details and timings will be set out at the Budget in October 2026.

Can I use Your First Home to buy an older (second-hand) property? Based on the announcement, no. It’s for new-build homes bought from developers taking part in the scheme.

Is there an income limit? Yes, a household income cap is planned, along with local property price caps. The exact figures haven’t been published yet.

Is Your First Home the same as Help to Buy? It works in a similar way to the old Help to Buy equity loan, but with a lower minimum deposit and a household income cap.

Talk to Mortgage Pathways

We’re new build mortgage specialists. If you’d like to understand what you could afford, or want us to keep you updated on Your First Home, book a free chat with our team

Your home may be repossessed if you do not keep up repayments on your mortgage.The below blog has information contained within was correct at the time of publication but is subject to change. This is for information purposes only and does not constitute advice