First Homes Scheme

Direct Answer

The First Homes Scheme allows eligible first-time buyers in England to buy certain homes at a 30% to 50% discount to market value.

Yes, a mortgage is still usually needed because the buyer must be able to get a mortgage for at least half of the discounted purchase price.

No, not every first-time buyer will qualify automatically. Buyers have to meet the national rules and may also need to meet local council criteria for some properties.

• First Homes is available only in England, not across the whole UK.
• It is aimed at first-time buyers buying selected scheme properties.
• The official discount range is 30% to 50% off market value.
• Buyers must usually be able to get a mortgage for at least 50% of the discounted price.
• Local councils can add local eligibility rules, such as key worker priority, local connection or lower income limits.
• When the property is sold, the same percentage discount usually has to be passed on to the next eligible buyer.
• The scheme does not guarantee mortgage approval or access to a specific home.

What is the First Homes Scheme?

The scheme was designed to help some first-time buyers access home ownership at a lower entry price than a normal market purchase. GOV.UK states that eligible buyers may be able to buy a home for 30% to 50% less than its market value.

The main difference from a standard purchase is that the home is sold at a reduced price under scheme rules rather than at full market price. That can reduce the size of the mortgage and deposit needed, but it does not remove the lender checks or the legal and administrative steps involved in the purchase.

The scheme is tied to qualifying homes. According to GOV.UK, the property can be either a new home built by a developer or a resale property previously bought under the First Homes scheme.

How does it work?

In practical terms, First Homes works by applying a permanent percentage discount to an eligible property. The buyer purchases the home at the discounted price rather than the full market value, and the same percentage discount usually has to be preserved on future resales within the scheme.

That means the discount affects the purchase price directly. However, the page should not present one fixed discount as universal because the official range is 30% to 50%, and the exact position depends on the property and scheme conditions.

Local eligibility is also important. GOV.UK says councils may set local criteria, for example prioritising key workers, people who already live in the area or lower-income households. Those local criteria apply only for the first 3 months that a First Home is on the market.

When the property is sold, the owner will usually need to sell to an eligible First Homes buyer and apply the same percentage discount they originally received. Official guidance also requires the seller to contact the council and obtain a valuation from a RICS-registered surveyor.

Who may qualify?

At national level, GOV.UK says the buyer must be aged 18 or over, be a first-time buyer and be able to get a mortgage for at least half of the home’s price after the discount. The normal income limit is up to £80,000 before tax, or up to £90,000 in London, based on the previous tax year.

Where more than one person is buying, all of them must be first-time buyers and they must apply together, even if not all of them are taking the mortgage. Their joint income also has to stay within the scheme limits.

Councils may add local criteria. GOV.UK gives examples such as key workers, people with a local connection and lower-income households. That means eligibility is shaped not only by the national rules but also by the local authority and the individual property.

Official guidance also provides local exemption rules for members of the armed forces, certain former spouses or civil partners, bereaved partners and veterans who left the armed forces within the last 5 years. Those applicants still need to meet the rest of the scheme requirements.

Mortgage and affordability

One of the biggest points to explain clearly is that the discount does not mean automatic approval. The lender still checks affordability, income strength, employment stability, existing commitments, credit history and the source of deposit in the normal way.

The scheme may help because a reduced purchase price can mean a smaller mortgage than a full-price purchase of the same property. Even so, the lender still has to accept the case under its own policy and the buyer still has to manage the monthly payments and all purchase-related costs.

The official requirement to obtain a mortgage for at least 50% of the discounted price makes it clear that the scheme works alongside mortgage lending rather than replacing it.

Deposit and costs

Buyers should look beyond the discount itself and budget for the full transaction. Costs may include the deposit, monthly mortgage payments, solicitor’s fees, valuation and mortgage fees, moving costs and any stamp duty implications depending on the buyer’s circumstances.

The discount should not be confused with zero upfront cost. A lower purchase price may reduce the amount needed for deposit and borrowing, but buyers still need a realistic budget for the whole process.

It is also sensible to check the detailed conditions with the adviser and solicitor, especially where the property is tied to a developer-led scheme offer and local authority approval.

Selling the property

This is one of the most important parts of the scheme and one of the most misunderstood. GOV.UK says that, in most cases, the property can only be sold to someone who is eligible for a First Home and the same percentage discount must be applied on resale.

The seller must tell the local council, use an estate agent and obtain a valuation from a RICS-registered surveyor. The resale price is based on the current market value less the original discount percentage.

Only in some circumstances can the owner ask for permission to sell on the open market at full value. GOV.UK says this may apply where the property has been unsuccessfully marketed as a First Home for at least 6 months, or where selling under the scheme would cause severe difficulty such as bankruptcy.

Benefits

The clearest advantage is the lower purchase price compared with full market value. For some first-time buyers, that can make home ownership more achievable than a standard purchase.

Another benefit is that the discount is intended to stay within the scheme for future resales, so the support is designed to continue helping later buyers rather than ending with the first purchaser.

For some buyers, the reduced price may also mean a smaller mortgage than buying the same property without the scheme discount. That does not guarantee success, but it can improve affordability in the right case.

Limits

The first limit is availability. Not every property qualifies for the scheme, and not every first-time buyer who meets the broad national rules will be able to use it.

The second limit is local variation. Councils may impose extra criteria, and a particular property may be affected by local housing policy, developer arrangements and the timing of the sale period.

The third limit is resale control. Owners do not automatically have full freedom to sell on the open market at any price from day one because the scheme keeps the discount and resale process in place.

There is also the normal mortgage risk: no guaranteed lending approval, possible lender policy changes and full responsibility for repaying the mortgage.

Compared with other schemes

First Homes is different from Shared Ownership because the buyer purchases a discounted home rather than buying only a share and paying rent on the remaining part. The structure is very different in legal and financial terms.

It is also different from Right to Buy and Right to Acquire, which are linked to different housing situations and rights rather than a discounted first-time buyer purchase route for selected homes.

It also differs from LIFT Scotland in both geography and structure. First Homes applies in England and is based on a permanent discount, while LIFT Scotland is a Scottish shared equity model. Help to Buy operated in different forms and many versions are now closed or historic, so it should not be treated as the same product.

How a broker can help

From Extend Finance’s point of view, the key question is not just whether the scheme sounds attractive but whether the buyer has a workable path through the purchase. A broker can help review affordability, income, commitments, deposit source and how a lender may view the case.

A broker can also help organise documents, explain how the discount changes the borrowing picture and compare First Homes with alternatives such as standard purchase or Shared Ownership. That is especially useful before reserving a property or paying fees.

This support is practical, not a promise of approval. The final decision sits with the lender and, on the scheme side, with the local authority, developer and legal process.

Next step

If you are considering the First Homes Scheme, the sensible first step is to check whether your mortgage position, income and documents fit this type of purchase.

Speak to an Extend Finance adviser to review affordability, deposit, credit profile and whether First Homes is the right route before reserving a property or starting a formal application.