As a first-time buyer, the biggest hurdle most face is the deposit. If you are currently renting, rent increases means you are able to save less and slowly the goal posts of when and what you can afford to buy change.
On September the 28th 2026, the Government announced that first time buyers could soon buy a home with a 2.5% deposit. The scheme is called Your First Home (Ministry of Housing, Communities and Local Government, 2026). Here is what we know so far, what it could mean for you and the questions worth asking.
What is your First Home Scheme?
Your First Home is a government-backed equity loan scheme for first-time buyers in England. Andy Burnham announced that both funding and timings will be due to be confirmed by Chancellor John Healey at the Budget on 28th of October 2026. Update: the Budget on 28 October confirmed £4.7 billion of funding for the scheme, which aims to help around 70,000 households (HM Treasury, 2026). Read our guide to how the Autumn Budget will affect you.
If this sounds like something you've heard before, it bears a lot of resemblance to the Help to Buy scheme, which ran from 2013 and helped buyers to get onto the ladder with a 5% deposit and a government backed loan. The difference this time, the deposit has been halved - 2.5%.
The key points so far
- 2.5% deposit from you
- 20% equity loan from the Government, which will have an initial interest free period
- 77.5% mortgage from a lender for the funds needed
- New build homes only, from developers that will be taking part in the scheme
- England only
- Caps on household income and property prices, set dependant on location
How would a 2.5% deposit work?
We have put some numbers together. The average first-time buyer home in England sits around £230,000. We'll work the numbers through on this property below using Your First Home and compare it to a standard 5% deposit mortgage.
Standard 95% mortgage
Property Value: £230,000
Deposit: £11,500 (5%)
Government Loan: 0
Mortgage: £218,500
Your First Home Scheme
Property Value: £230,000
Deposit: £5,750 (2.5%)
Government Loan: £46,000 (20%)
Mortgage: £178,250
These numbers means that, you would need to save less money upfront (approx. £5,750 in this case) The mortgage then covers 77.5% of the property value which also means that due to the LTV (loan to value) you could also be eligible for lower rates that you would typically get on a 95% mortgage.
One thing to bare in mind: an equity loan doesn't mean free money - historically, you do have an interest free period but eventually, you will need to pay it back. Most borrowers will pay this back once they sell their home or potentially re-mortgage. The Help to Buy scheme which ran from 2013, linked the Help to Buy loan directly to the property value - that meant that if the property value increased (which is likely) so did the value of the loan. We haven't been informed of how this will work with the new scheme, but once the budget lands - we can look at it in more detail.
Who will benefit?
The scheme is aimed at people who can afford monthly mortgage payments, but are stuck on the deposit - the Prime Minister framed it as help for those who don't have family money to fall back on, or as he put it "the bank of Mum and Dad (This is Money, 2026)".
You could be a good fit if you are:
- A First Time Buyer (or buyers)
- Are open to buying a new-build home
- Earn enough money to cover your mortgage payments
- Able to save 5% of the property value as a deposit
- Fall under the household income cap (awaiting details)
The Intermediary Mortgage Lenders Association (The Intermediary, 2026) estimates around 3.5 million households who would have been expected to be first-time buyers, haven't been able to since 2008 due to the financial crisis.
Unfortunately, the scheme will not apply in Wales or Scotland as housing support is set by the devolved governments but it is worth looking into what is available locally.
What does the industry think of this?
The mortgage world has hesitant thumbs up for the Your First Home Scheme. Natwest (Mortgage Professional, 2026) says it "stands ready" to support the scheme and the Intermediary Mortgage Lenders Association (The Intermediary, 2026) says it has been calling out for this type of help for buyers. Mortgage broker John Charchol called it "positive news for first-time buyers"
The industry has voiced that borrowers need to bare in the mind the following:
- You have to pay the loan back: 20% Government backed loan will need to be paid back at some point so it is important that borrowers consider their affordability for the future, not just day one.
- It applies to new-builds only: New-builds often cost more than similar older homes, this could narrow you choice.
- Are there enough homes: There are some worries that there will not be enough suitable new-builds, where people actually want to live.
- Stamp Duty: Some worry about how price caps will sit alongside first-time buyer stamp duty relief, especially in London and the South East where homes cost more than £300,000 typically.
The Association of Mortgage Intermediaries (The Intermediary, 2026) believes that the scheme's success will depend on getting the details right.
What this means for you
A smaller deposit means you could be a home owner faster but it doesn't mean that you should rush into it. You will be making a huge financial commitment and it is important that it is not only financially viable but also, is this the right home for you? Is it the right area? Can you commute to work? Are there coffee shops near by for you? These are all unique points to each person, but important to consider.
- The Area
What is the neighbourhood like day-to-day? Schools, transport, local amenities and crime rates all play an important part. You can check areas you have in mind here. - The Price
Is the developers price in line with what similar homes nearby are worth? What do properties usually sell for in the area? Are the properties of a similar value to what you want to buy? - The Running Costs
New-builds usually have strong energy ratings which means not only are they more energy efficient but also can mean cheaper bills for you. Make sure that you check for the service charges, ground rent and potentially estate management fees too. - The Long Term
Do you see yourself living in the property for the next 5-10 years? Consider your life currently and where you see yourself in the next 5-10 years to help make your decision.
Planna is here to help you on this journey, we bring data on homes and neighbourhood's together in one place - you can compare areas, understand what a property is really worth, look at the future of the property and you can buy with confidence, not guess work.
FAQ's
When does the scheme start?
The Budget confirmed that pre-registration opens by the end of December 2026, with full applications from February 2027 (HM Treasury, 2026).
Is the scheme the same as Help to Buy?
It has similarities but it is not the same. They both use a Government backed 20% equity loan on new-build homes but remember, with the Your First Home scheme, it is a 2.5% instead of a 5% with Help to Buy.
How much deposit do I need for the scheme?
It will always be 2.5% of the property value.
Can I buy a older home with this scheme?
No, this is for new build properties and participating developers only.
Do I have to pay back the equity loan?
Yes. The equity loan is Government backed and expecting to be interest free for a certain period of time but it must be repaid. Historically, the loan will be paid back when the property is sold or re-mortgaged.
Are there any price or income limits?
Yes. Household income caps are £110,000 outside London and £140,000 in London. Price caps are based on median prices in each local authority, with caps of £650,000 in inner London and £500,000 in outer London (HM Treasury, 2026).
References
HM Treasury (2026) Budget 2026. Available at: https://www.gov.uk/government/publications/budget-2026-document/budget-2026-html (Accessed: 29 October 2026).
The Intermediary (2026) AMI welcomes new Government first-time buyer scheme. Available at: https://theintermediary.co.uk/2026/09/ami-welcomes-new-government-first-time-buyer-scheme/ (Accessed: 29 September 2026).
The Intermediary (2026) Your First Home could help address FTB shortfall – IMLA. Available at: https://theintermediary.co.uk/2026/09/your-first-home-could-help-address-ftb-shortfall-imla/ (Accessed: 29 September 2026).
This is Money (2026) Government help for buyers with no Bank of Mum and Dad. Available at: https://www.thisismoney.co.uk/money/mortgageshome/article-16163927/Government-help-buyers-no-Bank-Mum-Dad.html (Accessed: 29 September 2026).
Ministry of Housing, Communities and Local Government (2026) New first-time buyer scheme to be confirmed at Budget. Available at: https://www.gov.uk/government/news/new-first-time-buyer-scheme-to-be-confirmed-at-budget (Accessed: 29 September 2026).
Mortgage Professional (2026) Burnham's Your First Home scheme wins cautious industry backing. Available at: https://www.mpamag.com/uk/mortgage-types/first-time-buyer/burnhams-your-first-home-scheme-wins-cautious-industry-backing/591415 (Accessed: 29 September 2026).
