Saving a deposit is one of the biggest barriers I see first-time buyers facing.
Someone might be perfectly capable of managing a mortgage payment every month, but saving £15,000, £20,000 or £30,000 while also paying rent and normal living costs can take years.
So when the Government announced a new scheme allowing some first-time buyers to purchase with a deposit of just 2.5%, it understandably attracted a lot of attention.
The scheme is called Your First Home.
But there is something extremely important to understand before you start searching for properties:
The scheme has been announced, but the full rules have not yet been published and it is not currently open for applications.
As at 27 October 2026, further details are due to be confirmed at the Budget.
So rather than pretending we know everything already, let’s separate what has actually been announced from what we’re still waiting to find out.
What Is the Your First Home Scheme?
Your First Home is a proposed Government-backed equity loan scheme for first-time buyers in England.
Under the plans announced so far, eligible buyers purchasing a qualifying new-build property from a participating developer are expected to be able to buy with:
A deposit of just 2.5%
plus
A 20% Government-backed equity loan.
The remaining purchase price would then need to be funded, normally through an appropriate mortgage and any other permitted funds.
If you used the full 20% equity loan alongside the minimum 2.5% deposit, that would leave 77.5% of the purchase price to fund through the mortgage.
That is potentially a very different proposition from taking a 95% mortgage.
But lower borrowing doesn’t necessarily mean the scheme will automatically be suitable for everyone.
There are still some very important details we don’t know.
How Would a 2.5% Deposit Work?
Let’s use a simple example.
Imagine you’re buying an eligible new-build property for:
£250,000
A 2.5% personal deposit would be:
£6,250
A 20% equity loan would be:
£50,000
That would leave:
£193,750
to be funded by the mortgage, assuming the scheme operates exactly on those announced percentages and you meet all relevant criteria.
Compare that with a conventional 95% mortgage on the same property.
A 5% deposit would be:
£12,500
and the mortgage would be:
£237,500
So the attraction is obvious.
You potentially need to save a smaller initial deposit and borrow considerably less through the main mortgage.
But the £50,000 equity loan in this example isn’t free money.
It’s borrowing.
And understanding exactly how that borrowing will eventually be repaid is one of the most important details still to come.
Who Will Be Able to Use Your First Home?
We already know some of the broad eligibility rules.
The scheme is intended for:
- First-time buyers.
- Buying in England.
- Purchasing an eligible new-build home.
- Buying from a housebuilder participating in the scheme.
The Government has also confirmed that there will be:
- A household income cap.
- Local property price caps.
However, the actual limits have not yet been published.
So if you’ve seen an article confidently telling you exactly how much you’re allowed to earn or exactly how expensive your property can be, I’d be cautious.
Those are among the details expected to be confirmed.
Is Your First Home Available Throughout the UK?
No.
The scheme announced so far applies to England.
Housing policy is devolved, so buyers in Scotland, Wales and Northern Ireland should not assume the same scheme will be available there.
Will Every New-Build Property Qualify?
No.
The property will need to be a new-build home from a participating developer.
That means you shouldn’t assume:
“It’s a new build, therefore I can buy it with a 2.5% deposit.”
The developer will need to be participating in the scheme and the property will need to meet the relevant requirements.
We also know that local property price caps are planned.
So even a property being sold by a participating developer may potentially fall outside the scheme if its price exceeds the relevant local limit.
The detailed rules are still awaited.
Is the 20% Government Loan Free?
No.
This is an important distinction.
The proposed 20% contribution is an equity loan, not a grant.
That means it will need to be repaid according to the scheme rules.
The Government has said there will be an initial interest-free period.
But as at the time of writing, we don’t yet know officially:
- How long that interest-free period will last.
- What interest or charges will apply afterwards.
- Exactly when the equity loan must be repaid.
- How repayment will be calculated.
- Whether you can repay it in stages.
- What happens if the property’s value rises or falls.
Those details matter enormously.
I wouldn’t want a first-time buyer concentrating solely on:
“I only need a 2.5% deposit.”
without understanding the debt sitting alongside their mortgage.
Is This Just the Old Help to Buy Scheme Coming Back?
It certainly has similarities.
The previous Help to Buy Equity Loan scheme also allowed buyers to combine a personal deposit, a Government equity loan and a normal mortgage when buying certain new-build properties.
Your First Home appears to follow a similar broad principle.
But I would not assume the rules will be identical.
The old Help to Buy scheme had its own rules covering:
- Eligibility.
- Property values.
- Interest.
- Repayment.
- Selling.
- Remortgaging.
- Repaying the equity loan.
Until the final Your First Home rules are published, it would be wrong to automatically apply all of those old rules to the new scheme.
Similar isn’t the same as identical.
How Will the Equity Loan Affect Me When I Sell?
We don’t yet have the final repayment rules.
And I think this is one of the biggest unanswered questions.
With an equity-style loan, you need to understand whether the amount eventually repayable is linked to:
- The original amount borrowed.
- A percentage of the property’s future value.
- Or another calculation.
That could make a significant difference.
Imagine the Government initially provided a £50,000 equity loan.
If the home later increased substantially in value, would you simply repay £50,000?
Or would the amount payable increase because the Government’s interest is linked to the property’s value?
We need the final scheme documentation before answering that confidently.
That’s exactly the sort of detail I’d want a client to understand before committing.
Will the Equity Loan Make Monthly Payments Cheaper?
Potentially.
If part of the purchase is being funded through an equity loan with an initial interest-free period, you may need a smaller main mortgage than somebody purchasing the same property using a conventional 95% mortgage.
A smaller mortgage can mean lower monthly mortgage payments, depending on the interest rate, term and product.
But I wouldn’t describe that as permanently cheaper yet.
Eventually, there may be costs associated with the equity loan.
Those costs haven’t been fully confirmed.
You also need to consider the whole purchase, including:
- Mortgage payment.
- Equity loan costs when they begin.
- Service charges.
- Estate charges.
- Council Tax.
- Insurance.
- Maintenance.
- General household expenditure.
First-time buyer affordability needs to work beyond completion day.
Will I Automatically Get a Mortgage With a 2.5% Deposit?
No.
This is one of the most important points.
Your First Home may reduce the personal deposit required.
It does not remove normal mortgage underwriting.
You’ll still need a mortgage lender willing to participate in or accept the scheme.
And you’ll still need to meet that lender’s requirements.
That could include:
- Affordability.
- Income.
- Employment.
- Credit history.
- Existing financial commitments.
- Mortgage term.
- Property acceptability.
So:
Qualifying for the Government scheme does not automatically mean you qualify for the mortgage.
The reverse can also be true.
You might be perfectly capable of obtaining a normal mortgage but not meet the final eligibility criteria for Your First Home.
They’re separate assessments.
We Don’t Yet Know Which Mortgage Lenders Will Participate
This is another piece of the puzzle still missing.
At the moment, I wouldn’t tell somebody:
“Lender X will definitely offer Your First Home mortgages.”
We need to see which lenders participate and what their individual criteria look like.
That’s important because lender choice affects much more than interest rates.
Different lenders assess:
- Income.
- Overtime.
- Bonuses.
- Commission.
- Self-employed income.
- Credit history.
- Financial commitments.
in different ways.
So even once the scheme launches, there may still be significant differences between mortgage lenders.
Will There Be an Income Limit?
Yes, the Government has confirmed that a household income cap will apply.
But the amount hasn’t yet been confirmed.
The intention is to target the scheme towards first-time buyers who genuinely need support getting onto the housing ladder.
Until the actual threshold is published, I wouldn’t try to predict whether a particular household definitely qualifies.
Will There Be a Maximum Property Price?
Yes.
The Government has said there will be local property price caps.
That word “local” is important.
Rather than necessarily having one maximum property price across the whole of England, the limits are expected to reflect different housing markets.
A sensible qualifying price in the North East might look very different from one in London or the South East.
Again, the actual figures have not yet been published.
Why Is It Only for New Builds?
The scheme is designed partly to help first-time buyers but also to support new housing supply.
Participating developers will be expected to contribute towards the cost of the scheme.
As a result, Your First Home is currently designed around qualifying new-build homes, not ordinary properties being sold on the existing housing market.
That means the scheme may help somebody who wants a new-build property but do nothing for another first-time buyer who wants a Victorian terrace around the corner.
Are New Builds More Expensive?
Sometimes new-build homes can command a premium compared with similar older properties.
But that varies enormously by development, area and property.
I wouldn’t assume that because a scheme helps reduce the upfront deposit, the property itself automatically represents good value.
I’d still want a buyer to consider:
- The agreed purchase price.
- Comparable local properties.
- Service charges.
- Estate management fees.
- Lease terms if applicable.
- Build quality.
- Developer incentives.
- Local resale demand.
The financing scheme shouldn’t distract you from assessing the home itself.
What About Developer Incentives?
Developers sometimes offer incentives such as:
- Deposit contributions.
- Cashback.
- Flooring.
- Appliances.
- Paid legal fees.
- Other extras.
Mortgage lenders normally need to know about relevant incentives.
They can affect how a property is valued and how a mortgage application is assessed.
Once Your First Home launches, we’ll also need to understand exactly how developer incentives interact with the scheme.
I wouldn’t assume you’ll automatically be able to combine every developer incentive with the equity loan.
Is Your First Home the Same as the First Homes Scheme?
No.
The names are frustratingly similar.
First Homes is an existing affordable homeownership scheme where eligible first-time buyers can purchase qualifying properties at a discount of at least 30% below market value.
That discount normally stays attached to the property when it is later sold.
Your First Home is the newly announced scheme we’re discussing here.
It is expected to use:
- A 2.5% buyer deposit.
- A 20% Government-backed equity loan.
- A mortgage for the remaining amount.
They’re different schemes.
That distinction is going to cause plenty of confusion, so make sure you know which one you’re actually looking at.
Could I Use a Lifetime ISA With Your First Home?
We don’t yet have enough detail to confirm exactly how every existing first-time buyer support scheme will interact with Your First Home.
A Lifetime ISA can currently be used towards an eligible first-home purchase where the relevant rules are met.
But until the final Your First Home scheme guidance is published, I’d avoid assuming that every combination of Government schemes will automatically be permitted.
This is something I’d check once the final rules are available.
Will I Still Get First-Time Buyer Stamp Duty Relief?
First-Time Buyers’ Stamp Duty Relief is a separate tax relief with its own eligibility criteria.
If you’re purchasing an eligible home in England and meet the relevant Stamp Duty rules, relief may still potentially be available.
However, we still need the final Your First Home rules and local property caps before knowing how the schemes will interact in every circumstance.
Your conveyancer should confirm your specific Stamp Duty position.
Is a 2.5% Deposit Really Enough Money to Buy a House?
This is where I think the headline can be slightly misleading.
Technically, the scheme is expected to allow a personal deposit of 2.5%.
But you still need money for the wider purchase.
Potential costs can include:
- Solicitor or conveyancer.
- Survey.
- Mortgage fees.
- Moving costs.
- Stamp Duty where applicable.
- Furniture.
- Buildings and contents insurance.
- Initial repairs or improvements.
- Service charges and estate fees.
So don’t look at a £250,000 property and think:
“I have £6,250, therefore I’m ready to buy.”
You need to consider the whole cost of becoming a homeowner.
I Would Still Want You to Have an Emergency Fund
This matters particularly with very small deposits.
If you’ve spent absolutely every penny getting through the front door, you’re financially vulnerable immediately afterwards.
The washing machine doesn’t care that you’ve just completed.
Neither does the boiler.
And your employer doesn’t guarantee that nothing will ever change.
I’d rather somebody retained some sensible emergency savings than use every available pound simply because a scheme allows them to purchase sooner.
Getting onto the housing ladder is important.
Staying comfortably on it matters more.
Who Might Your First Home Help Most?
Based on what has been announced so far, I think the scheme could be particularly interesting for someone whose main barrier is saving the deposit rather than affording the monthly mortgage.
For example, imagine somebody currently pays significant rent every month.
They have stable employment and could potentially afford a mortgage.
But saving a 5% or 10% deposit while paying that rent is painfully slow.
Reducing the minimum personal deposit to 2.5% could potentially move the buying date considerably closer.
But there’s another side.
If somebody is already struggling with affordability, reducing the deposit doesn’t automatically solve that problem.
The mortgage still needs to be affordable.
A Smaller Deposit Doesn’t Fix Mortgage Affordability
This distinction is crucial.
There are two very different barriers to homeownership:
“I can afford the monthly cost, but I can’t save the deposit.”
and
“I have a deposit, but I can’t borrow enough based on my income.”
Your First Home appears primarily designed to help with the first problem.
The equity loan may also reduce the amount of conventional mortgage borrowing required, which could help affordability in some circumstances.
But it isn’t a blank cheque.
Lenders will still have lending limits and affordability requirements.
Don’t Stop Saving Because the Scheme Has Been Announced
If you’re hoping to use Your First Home, I’d keep saving.
We don’t know your final eligibility yet.
We don’t know the local property price limits.
We don’t know exactly when applications will open.
We don’t know which developments will participate.
And even if you do qualify, having more savings gives you greater financial resilience.
A 2.5% minimum deposit should be viewed as a potential opportunity.
Not a savings target you must stop at.
Should I Delay Buying Until the Scheme Launches?
I wouldn’t automatically do that either.
Suppose you’re already able to purchase a suitable home now using a conventional mortgage.
Waiting could potentially give you access to Your First Home.
But it could also mean:
- The property you wanted sells.
- House prices change.
- Mortgage rates change.
- Your personal circumstances change.
- You eventually discover that you don’t meet the scheme criteria.
Equally, somebody who’s several months away from being ready to buy may reasonably want to understand the new scheme before deciding what to do.
This is why I’d avoid a blanket:
“Wait for Your First Home.”
Whether waiting makes sense depends on your individual position.
What We Know So Far
As at 27 October 2026, the Government has announced that Your First Home is expected to:
- Operate in England.
- Be aimed at first-time buyers.
- Apply to qualifying new-build homes.
- Require a deposit from the buyer of as little as 2.5%.
- Provide a Government-backed equity loan of up to 20%.
- Include an initial interest-free period on that equity loan.
- Apply household income limits.
- Apply local property price caps.
- Require housebuilders to participate and contribute towards the cost of the scheme.
What We Still Don’t Know
Some of the most important information is still outstanding, including:
- The household income limit.
- The local property price caps.
- How long the equity loan will remain interest-free.
- What interest or other costs will apply afterwards.
- The precise equity loan repayment rules.
- Which mortgage lenders will participate.
- Detailed mortgage requirements.
- The application process.
- The launch date and implementation timetable.
- How the scheme will interact with every other first-time buyer initiative.
Those aren’t minor details.
Some of them could materially affect whether the scheme represents good value for an individual buyer.
Frequently Asked Questions
Is the Your First Home scheme available now?
No. As at 27 October 2026, the scheme has been announced but has not yet opened for applications. Further details are expected to be confirmed at the Budget.
How much deposit will I need?
The Government has announced that eligible buyers are expected to be able to participate with a deposit of as little as 2.5% of the property’s purchase price.
How much will the Government lend?
The announced equity loan is expected to be up to 20% of the property’s value or purchase price, subject to the final scheme rules.
Will I need a mortgage?
Yes. The scheme is designed to work alongside a conventional mortgage. If you used a 2.5% deposit and the full 20% equity loan, the remaining 77.5% would ordinarily need to be funded through the mortgage and any other permitted funds.
Is the Government equity loan free?
No. It is expected to be interest-free for an initial period, but it is still borrowing that will need to be repaid. The length of the interest-free period and subsequent costs have not yet been confirmed.
Can I buy any property?
No. The scheme is expected to be restricted to qualifying new-build homes from participating developers in England.
Is there an income limit?
There will be a household income cap, but the figure has not yet been confirmed.
Is there a maximum property price?
Yes. Local property price caps are planned, but the actual limits have not yet been published.
Is Your First Home the same as First Homes?
No. First Homes is an existing discounted-property scheme. Your First Home is the newly announced 2.5% deposit and equity loan proposal.
Can I use the scheme with a Lifetime ISA?
The detailed interaction between Your First Home and other homeownership schemes still needs to be confirmed. Don’t assume a combination is permitted until the final rules are published.
So, Is Your First Home Good News for First-Time Buyers?
Potentially, yes.
A scheme that allows somebody to purchase with a 2.5% deposit could make an enormous difference to buyers who can comfortably manage homeownership but are stuck trying to save a deposit while paying rent.
But I’m deliberately using the word:
Potentially.
Because we don’t yet have enough detail to judge the scheme properly.
I want to know:
Who actually qualifies?
Which properties qualify?
Which lenders will participate?
How long is the equity loan interest-free?
What happens afterwards?
How is the equity loan repaid?
What happens when you remortgage or sell?
Those answers matter just as much as the 2.5% headline.
I’ve helped enough first-time buyers to know that the exciting part is usually getting the keys.
My job is to think about what happens afterwards too.
A smaller deposit could help you buy sooner.
But the mortgage, equity loan and all the normal costs of homeownership still need to work comfortably for you over the longer term.
That’s the test I’ll be applying when the full scheme details arrive.
If you’re saving for your first home and want to understand what you could potentially borrow now, or whether waiting for the Your First Home scheme might be relevant to your circumstances once the full details are known, you can book an appointment here:
https://veganmortgageadviser.co.uk/appointment
Your home may be repossessed if you do not keep up repayments on your mortgage.
The Your First Home scheme has been announced but, as at 27 October 2026, the full eligibility criteria, costs, mortgage arrangements, equity loan repayment terms and implementation timetable have not yet been confirmed. Scheme details may change before launch.
Mortgage availability and suitability depend on your individual circumstances, the property and lender criteria. An equity loan is borrowing and will need to be repaid according to the final scheme terms. This article provides general information only and does not constitute a personal mortgage, tax, legal or financial recommendation.