Your First Home scheme explained: 2.5% deposit, 20% loan

What is the Your First Home scheme?

Your First Home is a government scheme, announced on 26 September 2026, that helps first-time buyers in England buy a new-build home with a deposit of just 2.5% of the price. The government lends you 20% of the price as an equity loan, and a normal mortgage covers the rest (GOV.UK).

An equity loan is not like a normal loan. Instead of owing a fixed sum, the government owns a share of your home’s value. Help to Buy worked this way, and the government’s use of the words “equity loan” means we expect Your First Home to as well, although the repayment rules have not been published: when you sell, or when the loan ends, you repay 20% of what the home is worth at that time, whether that is more or less than you borrowed. That is the most important thing to understand about the scheme, and it is why the repayment page exists.

The Prime Minister, Andy Burnham, announced the scheme on the eve of the Labour Party conference, saying it is aimed at people who do not have help from “the bank of mum and dad” (BBC News). Downing Street’s own post on X summed it up as a “first-time buyers scheme with 2.5% deposit”, “launching soon” (10 Downing Street on X). The Ministry of Housing, Communities and Local Government (MHCLG) published a short press release the same day. Everything else, including the detailed rules, comes at the Budget on 28 October 2026.

How does it work?

Take a £230,000 starter home, the example used in reports of the announcement (it is Rightmove’s average price for a first-time buyer home, quoted by The Independent; the government’s own release gives no example). Under the scheme:

A mortgage of £178,250 at 5% over 25 years costs about £1,042 a month (5% was the best fixed rate for a mortgage of that size relative to the price on 26 September 2026, according to the HomeOwners Alliance rate table). The same home bought with a 5% deposit and a 95% mortgage at about 5.55%, the best small-deposit rate that day, would need a £11,500 deposit and cost about £1,348 a month. So the scheme needs £5,750 less up front and saves roughly £306 a month while the loan is interest-free. That is where the government’s claim that buyers “could save hundreds of pounds per month compared to a 95% mortgage” comes from (GOV.UK).

Try your own numbers in the Your First Home scheme calculator, which also shows what you would repay on the loan if the home rises or falls in value.

Who can use it?

The announcement sets out the basics; the detail comes at the Budget.

• You must be a first-time buyer. The exact definition is not published yet; the eligibility page explains how the government has defined it in other schemes.
• The home must be a new build in England, bought from a developer that has signed up to the scheme.
• There will be a household income cap. The level has not been set.
• There will be local property price caps. The levels have not been set; the £600,000 figure some news sites quote was Help to Buy’s London cap (GOV.UK homebuyers’ guide), not a new announcement.
• An age limit is possible. The BBC reports that ministers have not confirmed whether there will be one.

What is announced and what is not?

Nothing is final until the Budget on 28 October 2026 sets the rules, so “announced” below means stated in the government’s release of 26 September 2026.

When does it start?

The Chancellor, John Healey, will set out the full scheme, its costs and the implementation timetable at the Budget on Wednesday 28 October 2026 (HM Treasury). ITV News reports that pre-registration is expected to open by the end of 2026 (ITV News). Nobody has given a date for the first purchases; our reading is that completions start in 2027, but that is a guess, not a fact.

We will update every page on this site on Budget day. If you want an email when that happens, use the form at the bottom of this page.

How is it different from Help to Buy?

Help to Buy ran from 2013 to 2023 and helped more than 387,000 households buy a new build, 328,000 of them first-time buyers, according to the government’s own evaluation (GOV.UK). It asked for a 5% deposit, lent 20% (40% in London), was interest-free for five years, and in its final two years applied regional price caps.

Your First Home asks for half the deposit (2.5%), is limited to first-time buyers with an income cap, and makes developers pay towards the running costs. Everything else about how the two compare is on the Your First Home vs Help to Buy page, including the lessons from Help to Buy that the Housing Secretary says the new scheme will “build on” (BBC News).

What does it cost you over time?

Three things decide the real cost, and only the first is partly known.

1. Interest on the equity loan. Free at first. If the Help to Buy rules are copied, you would pay 1.75% of the amount borrowed from year six, rising every year with inflation plus 2%. On a £46,000 loan that is about £67 a month in year six (our assumption, explained on the methodology page).
2. The repayment. As with Help to Buy, you are expected to repay 20% of the home’s value when you sell or pay the loan off. If a £230,000 home is worth £253,000 by then, you repay £50,600, not £46,000. If it is worth £207,000, you repay £41,400. The repayment page works through this.
3. The mortgage itself. A 77.5% mortgage usually gets a better rate than a 95% one, which is where most of the monthly saving comes from. Rates change; the calculator lets you set your own.

Is it a good idea?

For some people, yes: if you cannot save a 5% deposit, or a 95% mortgage would stretch you, the scheme can make the difference between buying and not buying. For others, no: if you plan to move within a few years, if prices rise strongly, or if you could save a bigger deposit within a year, the equity loan can cost more than it saves. The Conservatives have argued the scheme loads buyers with more debt and risks pushing up new-build prices; the Home Builders Federation has welcomed it (BBC). We weigh both sides on the pros and cons page.

What should you do now?

• Check the basics of eligibility: are you a first-time buyer, and do you want a new build in England?
• Run your numbers in the calculator, including the repayment scenarios.
• Work out how much deposit you need and how long it will take to save. If you are under 40, look at the Lifetime ISA, which adds 25% to your savings.
• Compare the alternatives on the comparison page: Shared Ownership, First Homes, Own New and a plain 95% mortgage.
• Keep an eye on our updates page, where we post the rules as soon as the Budget sets them and pre-registration opens.