Is Your First Home worth it? Pros, cons and who it suits

Is Your First Home worth it?

For a first-time buyer who can afford a mortgage but cannot save a 5% deposit, and who wants a new build to live in for at least five years, probably yes. On the £230,000 home used as the example in reports of the announcement you need £5,750 instead of £11,500, and pay about £306 a month less than with a 95% mortgage while the loan is interest-free (our arithmetic on the rules in the GOV.UK announcement).

For someone who could save a 5% deposit within a year, wants an older home, or expects to move within five years, probably not. You give up 20% of any rise in value, pay interest later, pay a new-build premium, and start with almost no cushion against a price fall. The rules that decide most cases, the income cap and the local price caps, arrive at the Budget on 28 October 2026. This page says where we are assuming.

The case for Your First Home

A deposit you can actually save

The deposit is 2.5% of the price. On £230,000 that is £5,750, against £11,500 for a 5% deposit and £23,000 for 10%. At £400 a month of saving, the gap between 2.5% and 5% is over a year of saving, and a year of rent.

A cheaper monthly payment

Your mortgage covers 77.5% of the price instead of 95%, and a smaller mortgage gets a lower rate. On £230,000 the mortgage is £178,250. At 5%, the best fixed rate for a mortgage of that size against the price on 26 September 2026, that costs about £1,042 a month over 25 years. The same home with a 5% deposit needs a £218,500 mortgage at about 5.55%, the best 95% rate that day (HomeOwners Alliance), which costs about £1,348 a month. The gap is about £306 a month, or roughly £18,400 over five years (our arithmetic). The 95% borrower does clear about £2,900 more of their mortgage in that time, so the true gap is nearer £15,400, still a large sum.

A new home, with no chain and no rent

You get a finished new home with a builder’s warranty, no chain and nothing to renovate. And every month you are not saving for a bigger deposit is a month you are not paying rent. That, not the maths of the loan, is why most people used Help to Buy.

It did get people into homes

The government’s evaluation of Help to Buy, published on 16 September 2026, found that “over 387,000 properties were purchased through the scheme, of which 328,000 were by FTBs”, and that “46% of Help to Buy customers in England said they could not have bought without the scheme” (GOV.UK). Your First Home copies that model with a smaller deposit and an income cap to aim it at people who need it.

The case against Your First Home

You give up 20% of any growth

The loan is a 20% share of your home. If the £230,000 home is worth £253,000 when you repay, you owe £50,600, not £46,000. At £287,500 you owe £57,500. The repayment page works through the sums. Over five years the monthly saving usually wins: prices would need to rise by more than about 40% for the extra repayment to exceed the £18,400 saved (our arithmetic on the £230,000 example). But the saving shrinks when the interest starts, and the share of growth never does.

Interest arrives later

The government promises only “an initial interest free period” (GOV.UK). If the final version of Help to Buy is copied, that is five years, then 1.75% of the sum borrowed, rising each April by inflation plus 2% (GOV.UK). On £46,000 that is about £67 a month in year six, and the payments buy you nothing: they do not reduce the loan. The interest page has the full table.

The new-build premium and resale

New homes cost more than similar older ones, and the premium fades once the home is no longer new. The evaluation found “a new build premium of 5% for non-Help to Buy new builds, and 6% for Help to Buy new builds” (GOV.UK). It also found the scheme “led to an increase in prices in areas that were already relatively expensive”. A scheme that pays 20% of a developer’s price tends to prop up that price.

Negative equity with a 2.5% deposit

You own the whole home, but the government’s loan is secured on it and is expected to be repaid as 20% of the value, so the share of the value that is yours is 80%, against a mortgage of 77.5% of the price. So a fall of just over 3% in value, from £230,000 to about £222,800, puts your share below your mortgage in the first year. A 10% fall in year one leaves you about £9,000 short (our arithmetic). Negative equity does not force you out, but it stops you moving or remortgaging until prices recover. Repayments build a cushion: about £26,000 after five years at flat prices.

Limited choice, England only

You can only buy a new build, only in England, and only from a developer that has signed up (GOV.UK). If the developments near you are not in the scheme, neither are you.

Caps you cannot plan around yet

There will be a household income cap and local price caps, and neither has been set. Help to Buy’s regional caps ran from £186,100 in the North East to £600,000 in London (GOV.UK). Your First Home’s may be tighter. Until 28 October 2026 nobody can tell you whether your income or your chosen home qualifies.

Paperwork and fees when you leave

Repaying a Help to Buy loan meant a surveyor’s valuation valid for three months, a £200 administration fee and a solicitor (GOV.UK). The evaluation found “some dissatisfaction with the redemption process” (GOV.UK).

What do the critics and the industry say?

The Conservatives attacked the scheme on the day it was announced. Katie Lam, the shadow housing secretary, said it asks buyers to “take on even more debt to afford the few homes that have been built”, that “slapping another levy on developers risks pushing up the price of new homes”, and called it “a colossal admission of failure” (BBC News).

The Home Builders Federation, the trade body for housebuilders, welcomed it: “Our analysis shows a well-designed scheme can make a meaningful difference” (BBC News). The evaluation credits Help to Buy with about 15% of the new homes built in England while it ran, so housebuilders’ enthusiasm is not disinterested.

The government’s own evaluation sits between the two. It found that “the scheme was successful in supporting people into home ownership in some areas in England, but was not as effective at removing affordability barriers for FTBs [first-time buyers] in areas that were already relatively expensive”. It found 54% of buyers could have bought without it, and that prices on the English side of the Welsh border ended “around 2% higher than it would have been” without it (GOV.UK). Real help for some, a subsidy for others, slightly higher prices for everyone.

Who is Your First Home likely to suit?

• You can afford about £1,000 a month on a £230,000 home but cannot reach a 5% deposit without years more renting.
• You want a new build anyway and expect to stay at least five years.
• Your household income and the homes you want will sit under the caps, once both are known.
• You have a plan to repay the loan: saving, overpaying the mortgage, or remortgaging before the interest bites.
• You have no family help with a deposit, the group the government says it is aiming at.

Who is it unlikely to suit?

• You could save a 5% deposit within a year or so. A normal mortgage means keeping 100% of any growth and choosing any home. See the 5% deposit mortgage comparison.
• You expect to move within five years. Valuation fees, the £200 charge, the new-build premium and the growth share all land at once.
• You want an older home, or an area where no participating developer is building.
• The £1,042 a month is already a stretch. The interest arrives in year six whether or not your pay has risen.
• Your household earns more than the cap, whatever it turns out to be.

A decision checklist

Answer each one honestly. Every “no” is a reason to look harder at the alternatives on the comparison pages.

1. Can I comfortably afford the mortgage, plus council tax, insurance and any service charge?
2. Could I still pay if the equity loan added £70 to £100 a month from year six?
3. Do I expect to live here for at least five years?
4. Would I choose a new build even without the scheme?
5. Have I checked what similar homes on the estate resold for, not just the developer’s price list?
6. Have I run the calculator with the value up 25% and down 10%?
7. Do I have a realistic route to repaying 20% of the value, in one go or in two halves?
8. Have I compared Shared Ownership, First Homes, Deposit Unlock and a plain 95% mortgage?
9. Am I waiting for the Budget on 28 October 2026 before I reserve anything?
10. Do I accept that nobody, including this site, knows whether prices will rise or fall?

What to do next

• Run your own numbers in the Your First Home scheme calculator, then the equity loan calculator with the growth scenarios.
• Read how the repayment works and what the interest costs.
• Compare the alternatives, starting with Your First Home vs Help to Buy.
• Wait for the Budget on 28 October 2026 before signing anything. We will update this page the same day.