Published: 28th October 2026
The government has announced a new scheme to help first-time buyers in England buy a new-build home with a smaller deposit. Your First Home was published by the Ministry of Housing, Communities and Local Government on 28 October 2026. The first homes are expected to be sold through it from April 2027.
As new build mortgage specialists working with developers across the North East and Yorkshire, we’ve gone through the detail. Here’s how the scheme works, who it’s for, and what to think about before you use it.
Published 28 October 2026. The information in this article was correct at the time of publication but is subject to change. It is for general information only. It is not tailored to your circumstances, so it should not be taken as advice on what is right for you.
What is Your First Home?
Your First Home helps first-time buyers in England buy a new-build home with a smaller deposit and a smaller mortgage. You fund the purchase in three parts:
- a deposit of at least 2.5% of the purchase price
- a repayment mortgage from a participating lender
- a government equity loan worth 20% of the purchase price, interest-free for the first 5 years
You own the home from the day you complete. The government is not a joint owner or your landlord. Lenders will still carry out their usual affordability and credit checks.
The government has set aside £4.7 billion over 5 years: £700 million in 2027 to 2028, then £1 billion in each year after that. Funding will be allocated through participating developers, and the government will keep demand under review.
How the numbers work
On the government’s £300,000 example, Your First Home halves the deposit and cuts the mortgage by £52,500 compared with a standard 95% mortgage.
| £300,000 new build | Your First Home | Standard 95% mortgage |
|---|---|---|
| Your deposit | £7,500 (2.5%) | £15,000 (5%) |
| Government equity loan | £60,000 (20%) | None |
| Mortgage | £232,500 | £285,000 |
| Monthly mortgage payment | £1,248 | £1,530 |
The equity loan is interest-free for 5 years. After that, interest is charged on the full loan and paid on top of your mortgage. These payments do not reduce the amount you owe.
| Period | Equity loan interest rate | Equity loan interest a month | Total monthly cost with Your First Home |
|---|---|---|---|
| Years 1 to 5 | 0% | £0 | £1,248 |
| Year 6 | 1.5% | £75 | £1,323 |
| Year 7 onwards | 3% | £150 | £1,398 |
The government’s figures assume a 30-year repayment mortgage at 5%, with no repayment of the equity loan during the period shown. They are rounded to the nearest pound.
A North East example
The government quotes a £220,000 price cap for Middlesbrough. Using the same assumptions on a £220,000 new build, you would put down £5,500, take a £44,000 equity loan and borrow £170,500. That is about £915 a month, against about £1,122 a month with a 95% mortgage and an £11,000 deposit. Equity loan interest would add about £55 a month in year 6 and £110 a month from year 7.
These figures are a guide only and should not be relied on as a recommendation or advice that any particular mortgage is suitable for you. They are not a mortgage quote and leave out fees, insurance, council tax, service or estate charges and maintenance. All mortgages are subject to the applicant(s) meeting the eligibility criteria of the specific lender.
The equity loan moves with your home’s value
The equity loan is a share of your home, not a fixed sum. If you borrow 20% of the price, you normally repay 20% of the home’s value when you pay it back, based on an independent valuation.
| £300,000 home later valued at | 20% you repay | Change from the £60,000 borrowed |
|---|---|---|
| £320,000 | £64,000 | £4,000 more |
| £280,000 | £56,000 | £4,000 less |
The government shares both the gains and the losses. You can repay some or all of the loan before you sell, and it is normally repaid in full when you sell.
Who can use it and which homes qualify
The scheme is aimed at first-time buyers who would struggle to buy a new build without help. To use it, you will normally need to:
- be a first-time buyer
- buy a new-build home in England, within your area’s price cap
- live in the home as your main residence
- have a total household income of £110,000 or less (£140,000 or less in London)
- get a mortgage from a participating lender
Only homes from developers taking part in the scheme will qualify. Developers of all sizes can join, but each must sign a participation agreement, so not every new build will be eligible.
Price caps will apply in each local authority area. The government has published a few examples so far:
| Area | Property price cap |
|---|---|
| Inner London | £650,000 |
| Outer London | £500,000 |
| Reading | £375,000 |
| Manchester | £355,000 |
| North Devon | £320,000 |
| Middlesbrough | £220,000 |
The full list of caps by local authority is due to be published shortly, along with the full eligibility rules. We’ll update this article once the caps for the North East and Yorkshire are confirmed.
Things to weigh up before you use it
Your First Home can make buying possible sooner, but it comes with costs and risks that a standard mortgage does not.
- The loan grows if your home’s value rises. You repay a share of the home’s value at the time, not the amount you borrowed.
- Interest starts in year 6. It is 1.5% in year 6 and 3% from year 7, charged on the full equity loan. It is paid on top of your mortgage and does not reduce what you owe.
- Your own stake starts small. On the £300,000 example, a fall in value of around 3% would leave you with no equity of your own. That can make moving or remortgaging harder.
- Repaying, selling or remortgaging has extra steps. You will usually need an independent valuation. Minimum repayments, valuation rules and any fees are still to be confirmed.
- Mortgage rates can change. Your payments could rise when an initial fixed or tracker rate ends.
- Other costs still apply. Budget for legal and mortgage fees, insurance, council tax, service or estate charges, and maintenance.
If you remember Help to Buy, this will feel familiar. One difference is the interest: Help to Buy’s fee started at 1.75% and then rose each year with inflation. Your First Home’s published rates are 1.5% in year 6 and 3% from year 7.
The government recommends getting financial and legal advice before you commit.
When it opens, and how we can help
Pre-registration is due to open before the end of 2026, with the first homes sold through the scheme from April 2027.
| When | What happens |
|---|---|
| By the end of December 2026 | Customer pre-registration opens and the first developers register |
| February 2027 | First customer applications |
| April 2027 | First property sales under the scheme |
Pre-registering does not commit you to buying through the scheme. It will tell you more about whether you are eligible and the price cap in your area.
At Mortgage Pathways, new build mortgages are what we specialise in. We work alongside developers across the North East and Yorkshire, and we’ll be tracking which lenders and developments join the scheme as they are announced. We can help you:
- check whether Your First Home could work for you, once the full rules are out
- compare it with other routes, such as a standard 95% mortgage
- understand what you could afford now, and once equity loan interest starts
- get your mortgage application ready so you can move quickly when applications open
Thinking about buying your first new build in 2027? Get in touch through mortgagepathways.co.uk for a chat about your options. For updates as the scheme details are confirmed, join our New Build Help Group on Facebook.
Important information
Read the government’s guidance in full: Your First Home on GOV.UK.
Please be aware that by clicking onto the above link you are leaving the Mortgage Pathways website. Please note that neither Mortgage Pathways nor PRIMIS Mortgage Network are responsible for the accuracy of the information contained within the linked site accessible from this page.
Your home may be repossessed if you do not keep up repayments on your mortgage.
MJF Financial Services Ltd trading as Mortgage Pathways is an Appointed Representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading name of Advance Mortgage Funding Limited, which is authorised and regulated by the Financial Conduct Authority.