Your First Home Scheme: 2.5% Deposit Mortgages
Buy a new-build home with just a 2.5% deposit. The government’s new Your First Home scheme lends first-time buyers 20% of the price, with full details due in the Budget on 28 October 2026.
Your First Home is a new government-backed equity loan scheme for first-time buyers in England, announced by Prime Minister Andy Burnham on 26 September 2026. It is aimed at people who earn enough to pay a mortgage but have struggled to save a large deposit – especially those without help from the “bank of mum and dad”.
It works in a similar way to the old Help to Buy equity loan, which closed in 2023. You put down a 2.5% deposit, the government lends you 20% of the price of a new-build home, and a mortgage lender provides the remaining 77.5%. Because your mortgage is a much smaller share of the price than a 95% mortgage, you may be able to access lower rates and smaller monthly repayments.
Chancellor John Healey will set out the full rules in the Budget on Wednesday 28 October 2026, and the government says buyers will be able to pre-register by the end of 2026. This page was last updated on 27 September 2026 and will be updated on Budget day.
How much deposit will I need?
Under Your First Home, your deposit is 2.5% of the purchase price. Here’s how the price of a new-build could be split, compared with a standard 95% mortgage:
Example: how the purchase price is funded
| New-build price | Your 2.5% deposit | 20% equity loan | 77.5% mortgage | Deposit on a 95% mortgage |
|---|---|---|---|---|
| £180,000 | £4,500 | £36,000 | £139,500 | £9,000 |
| £230,000 | £5,750 | £46,000 | £178,250 | £11,500 |
| £300,000 | £7,500 | £60,000 | £232,500 | £15,000 |
| £400,000 | £10,000 | £80,000 | £310,000 | £20,000 |
These figures are illustrations only. Local property price caps have not been published yet, so not every price shown will be eligible in every area. You’ll also need to budget for legal fees, surveys and moving costs.
What we know so far
Some details have been confirmed by the government. Others have been reported in the press but won’t be certain until the Budget.
Confirmed by the government
- For first-time buyers in England
- New-build homes only, from developers taking part in the scheme
- Minimum deposit of 2.5%
- Government equity loan of 20% of the property’s value
- An initial interest-free period on the equity loan
- A household income cap and local property price caps
- Developers pay a fee to take part, to help cover running costs
- Pre-registration to open by the end of 2026
Reported or still to be confirmed
- Interest-free period reported as five years, as under Help to Buy
- Loan reported to be repayable on sale, at the end of the mortgage, or within 25 years
- The actual income cap and price cap for each area
- Whether there will be a savings limit or an age limit
- What interest or fees apply after the interest-free period
- Which lenders will offer mortgages under the scheme
- The date you can actually apply and complete a purchase
Your First Home vs Help to Buy, First Homes and 95% mortgages
Several schemes have similar names. This is how Your First Home differs from the ones people most often confuse it with.
Scheme comparison
| Scheme | How it helps | Minimum deposit | Property type | Repaid? |
|---|---|---|---|---|
| Your First Home (new) | 20% government equity loan | 2.5% | New-build only | Yes, later |
| Help to Buy equity loan (closed 2023) | 20% equity loan (40% in London) | 5% | New-build only | Yes, later |
| First Homes | Home sold at 30% to 50% below market value | Usually 5% of the discounted price | Selected new-builds | No – discount stays with the home |
| Mortgage Guarantee Scheme | Government guarantee to the lender | 5% | New-build or existing | Normal mortgage |
Things to think about before using an equity loan
An equity loan can help you buy much sooner, but it is still borrowing. These are the points we talk through with every client.
- The loan moves with your home’s value. You borrow a percentage, not a fixed sum. If your home rises in value, the amount you repay rises with it; if it falls, you repay less.
- Interest starts after the free period. Under Help to Buy, fees began in year six and rose each year. Charges for Your First Home haven’t been announced, so plan to repay or remortgage before they start.
- New-build prices can carry a premium. New homes often sell for more than similar older homes nearby. The lender’s valuation and some local research help you avoid overpaying.
- You still need to pass affordability. Lenders will check your income, outgoings and credit history for the 77.5% mortgage in the usual way.
- Moving and remortgaging take planning. You’ll need agreement from the equity loan provider to remortgage, and the loan is usually repaid when you sell.
- It may not be your only option. A 95% mortgage, shared ownership or a family-assisted mortgage could suit you better. We compare them all.
Key dates
- 26 September 2026 – scheme announced by the Prime Minister
- 28 October 2026 – full details expected in the Budget
- By the end of 2026 – pre-registration due to open
- To be confirmed – first purchases using the scheme
How it works
The exact process will be published after the Budget. Based on how Help to Buy worked, we expect it to look like this:
- Save your 2.5% deposit – on a £230,000 home that’s £5,750.
- Tell us about your situation – a short call or our 7-minute online enquiry. We’ll check your likely eligibility and how much you can borrow.
- Check your credit reports – your statutory reports from Experian, Equifax and TransUnion are free. How to get your credit reports.
- Pre-register for the scheme – due to open by the end of 2026. We’ll let you know as soon as it does.
- Reserve an eligible new-build – from a developer taking part, within the price cap for your area.
- Apply for the equity loan and mortgage – we arrange the mortgage and keep things moving with the developer and your solicitor.
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Frequently asked questions
What is the Your First Home scheme?
A new government equity loan scheme for first-time buyers in England. It is expected to let eligible buyers purchase a new-build home with a 2.5% deposit, a 20% government equity loan and a 77.5% mortgage.
When does the Your First Home scheme open?
The government says pre-registration will open by the end of 2026. The scheme will be confirmed in the Budget on 28 October 2026. A date for the first purchases has not been announced.
Can I use it to buy an older or second-hand home?
No. The scheme is for new-build homes sold by developers taking part. If you’re buying an existing home, talk to us about 95% mortgages and other low-deposit options.
Is it the same as the First Homes scheme?
No. First Homes sells selected homes at a permanent discount to local buyers. Your First Home is a loan that you repay, usually when you sell or at the end of your mortgage.
Do I pay interest on the equity loan?
There will be an initial interest-free period. Press reports suggest five years, as under Help to Buy, but the length and what you pay afterwards will be confirmed in the Budget.
Are there income or price limits?
Yes. There will be a household income cap and local property price caps, set at different levels around the country. The figures haven’t been published yet.
Can I use Your First Home if I have adverse credit?
We expect so. Under the previous Help to Buy scheme, some specialist lenders offered suitable mortgages to buyers with defaults, CCJs or missed payments, and we expect a similar option under Your First Home. The lenders taking part and their criteria will be confirmed after the Budget, and every lender will still check your credit history. As adverse credit specialists, we can review your credit file now and help you get ready before the scheme opens.
We’re buying together. Do we both need to be first-time buyers?
Under Help to Buy, all buyers had to be first-time buyers. We expect the same rule for Your First Home, but this hasn’t been confirmed yet.
Does it work in Scotland, Wales or Northern Ireland?
The scheme has been announced for England. Housing is devolved, so the other nations run their own schemes.
Should I wait for the scheme or buy now?
It depends on your savings, where you want to live and whether a new-build suits you. We can compare buying now with a 5% deposit against waiting for Your First Home, so you can decide what works best for you.
How much are your fees?
Our fees are set out in our Terms of Business.
Register your interest and we’ll send you the confirmed rules on Budget day, then help you through every step. Lines open 9am to 5pm, Monday to Friday.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
This page is based on the government’s announcement of 26 September 2026 and press reporting. The scheme is not yet open and its rules may change when confirmed in the Budget. It is general information, not personal advice.