The government’s Your First Home Scheme will help eligible first-time buyers purchase a new-build home with a deposit of at least 2.5%.
The scheme will combine the buyer’s deposit with a government equity loan worth 20% of the property’s value. The buyer will then need a repayment mortgage for the remaining amount.
The scheme has been confirmed, although applications are not expected to open until February 2027. Further details about eligible homes, participating developers and lenders will be published before applications open. www.gov.uk
How will the Your First Home Scheme work?
Eligible first-time buyers will provide a deposit of at least 2.5% of the purchase price. The government will provide an equity loan worth 20% of the property’s value, and the buyer will arrange a repayment mortgage for the remaining balance.
For example, a £300,000 home could be funded through:
- Buyer’s 2.5% deposit: £7,500
- Government equity loan of 20%: £60,000
- Repayment mortgage: £232,500
The equity loan will be interest-free for the first five years. Interest will then increase gradually, so buyers should understand the longer-term costs before deciding whether the scheme is right for them.
An equity loan represents a percentage of the property’s value rather than a fixed cash amount. The amount to be repaid could therefore increase or decrease if the property changes in value.
Who can use the scheme?
The Your First Home Scheme will be available to eligible first-time buyers purchasing a new-build property in England from a participating developer.
Household income limits and local property price caps will apply. These limits will vary depending on the buyer’s location and circumstances.
Participating developers will also be expected to contribute towards the cost of the scheme.
More information about eligible homes, developers and lenders will be published before applications open.
What could the scheme mean for first-time buyers?
Saving enough for a deposit is one of the biggest obstacles facing many aspiring homeowners. A minimum deposit of 2.5% could reduce the amount some buyers need to save before purchasing.
The equity loan could also reduce the size of the mortgage required compared with buying with a standard 95% mortgage.
However, a smaller deposit does not automatically make a property affordable. Mortgage lenders will still assess income, expenditure, existing debts and credit history.
Buyers should also budget for other costs, including legal fees, surveys, mortgage charges, removals and ongoing maintenance.
Why have concerns been raised?
The scheme could give eligible buyers greater spending power while restricting support to participating new-build properties. Some property experts have therefore raised concerns that it could increase demand and potentially affect new-build prices.
Buyers should compare a qualifying property with similar new-build and existing homes in the surrounding area. Consider the location, size, specification, service charges, energy efficiency and likely resale appeal rather than focusing only on the size of the deposit.
What happens when the property is sold?
A home bought through the scheme will eventually be sold as a previously owned property, potentially without the same support being available to its next buyer.
The property’s future value will depend on market conditions, demand, location and its condition at the time of sale.
Buyers should understand how and when the equity loan must be repaid, including what happens if they sell the property, remortgage or repay the loan early.
Property values can rise as well as fall, and there is no guarantee that a buyer will recover the amount originally paid.
Should you wait for the scheme?
The Your First Home Scheme has been confirmed, but applications are not expected to open until February 2027.
Buyers should check the latest government guidance and speak to a qualified mortgage adviser to understand whether they may qualify.
Those planning to buy sooner may also wish to consider lower-deposit mortgages, shared ownership or purchasing a more affordable existing property.
Start planning your first move
The Your First Home Scheme could provide another route into homeownership for eligible first-time buyers. However, buyers should consider the complete cost of purchasing a property, not only the size of the initial deposit.
Your Move can help you explore homes for sale in your chosen area and guide you through the buying process.
Book a mortgage appointment today
The Your First Home Scheme is not expected to open for applications until February 2027. Eligibility requirements, property price caps, costs and timings may change. Your home may be repossessed if you do not keep up repayments on your mortgage. Seek independent financial and legal advice before committing to a purchase.
The 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.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £599. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.
Your Move is an introducer to Embrace Financial Services Ltd. Embrace Financial Services Ltd is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority.
You are under no obligation to use our recommended mortgage or protection adviser. Your decision will not affect the seller’s decision, the acceptance of your offer, or the progress of your purchase.
Please be aware that the information provided within these archives has been pre-published, as of the date published on each article. The information contained within, including references to taxation, legislation, regulation, or any other issues or concerns may no longer apply.
Your Move Emarketing Executive
