TL;DR
Your First Home: key points
The scheme was announced on 28 October 2026. Buyer applications are not open yet; February 2027 is the planned opening.
For eligible first-time buyers of participating new-build homes in England: at least 2.5% deposit, 20% government equity loan and a repayment mortgage for the balance.
The equity loan has no interest for 5 years. Interest is 1.5% in year 6 and 3% from year 7; these payments do not repay the loan.
You normally repay 20% of the home’s value when you settle the equity loan. Your repayment can rise or fall with the property value.
Full eligibility, local caps and repayment terms are still being published. Confirm them before reserving a home.
How the scheme works
Under the official Your First Home guidance, you own the property from completion. The government is neither a co-owner nor a landlord. Its 20% equity loan is linked to the home’s future value. This is different from the First Homes discount scheme and the former Help to Buy Equity Loan.
Illustration: a £300,000 new-build
- Your 2.5% deposit
- £7,500
- Government equity loan (20%)
- £60,000
- Repayment mortgage (77.5%)
- £232,500
- Purchase price
- £300,000
The same property with a standard 95% mortgage would need a £15,000 deposit and a £285,000 mortgage. This is an illustration, not a mortgage offer.
The government has allocated £4.7 billion over five years and expects to help around 70,000 households. Funding is £700 million in 2027–28 and £1 billion in each following year, so availability may be limited.
Who and where
The scheme is designed for first-time buyers who would struggle to buy without help. It covers qualifying new-build homes in England from developers participating in the scheme, within local price caps. The property must be your main home. Scotland, Wales and Northern Ireland have separate schemes.
- Total annual household income normally no more than £110,000 outside London or £140,000 in London.
- A repayment mortgage from a participating lender, subject to its affordability and credit checks.
- A deposit from 2.5% up to 15%, as stated in Budget 2026. Full eligibility criteria, including the precise first-time buyer definition and joint-buyer rules, are still to be published.
A full local-authority cap list is pending. GOV.UK examples are Inner London £650,000, Outer London £500,000, Reading £375,000, Manchester £355,000, North Devon £320,000 and Middlesbrough £220,000. A home below its cap will still need a participating developer.
Monthly costs and interest
For the first five years, you pay the mortgage but no interest on the equity loan. On the £60,000 loan in the example, 1.5% in year 6 is £75 a month and 3% from year 7 is £150 a month. Interest is separate from the mortgage and does not reduce the equity loan.
Official illustration: 30 years at 5%
- Years 1–5: scheme mortgage + loan interest
- £1,248 + £0
- Year 6
- £1,248 + £75
- From year 7
- £1,248 + £150
- Standard 95% mortgage comparison
- £1,530
Rounded monthly figures. The scheme totals are £1,248, £1,323 and £1,398 respectively. Actual rates may differ. Mortgage fees, insurance, council tax, service or estate charges and maintenance are excluded.
Repaying the equity loan
You normally repay the equity loan when you sell, but earlier partial or full repayment will be possible. An independent valuation may be needed. If the home is then worth £320,000, 20% is £64,000; if worth £280,000, 20% is £56,000. Minimum repayment amounts, valuation rules, possible fees and remortgage arrangements remain to be published.
Costs and risks
- A small deposit leaves little buffer against negative equity. In an illustration with a £232,500 mortgage at 5% over 30 years, after two years about £225,500 remains. If the home is worth £280,000, the £56,000 equity repayment plus mortgage is about £281,500, before sale costs.
- New-build homes can carry a price premium; their market value may fall after purchase.
- Equity-loan interest starts in year 6 and does not reduce the amount owed. A higher future mortgage rate could increase your costs.
- Developer participation and annual funding are limited; availability is not guaranteed.
Budget for legal and valuation fees, mortgage charges, insurance, council tax, service or estate charges, maintenance, moving and eventual selling costs. Before committing, GOV.UK strongly recommends independent financial and legal advice. Compare the whole cost with a standard mortgage, not just the initial payment. See our buying costs guide.
How it compares with other routes
A standard 95% mortgage generally needs a 5% deposit and has no government equity loan, so you retain all changes in the property’s value. Your First Home lowers the initial deposit to 2.5% but ties 20% of the later value to the loan. The old Help to Buy Equity Loan in England closed to new applications in October 2022; it is a separate scheme. First Homes is a property discount scheme, not this equity loan. The cheapest route depends on your mortgage terms, property and time horizon.
Citizenship and property abroad
The guidance published on 28 October does not specify nationality or immigration status. It is therefore not yet confirmed whether a visa, settled status or pre-settled status meets the scheme rules. A participating lender will also apply its own lending criteria. We provide mortgage advice, not immigration advice; buying a home does not give a right to live in the UK.
Other first-time buyer products such as SDLT relief and Lifetime ISA can treat past ownership anywhere in the world, including an inherited share, as relevant. The precise Your First Home definition is still pending. If you own or previously owned property abroad, check the published rules when available.
Dates and what you can do now
Government timetable, as announced 28 October 2026
- By end of December 2026
- Buyer pre-registration
- February 2027
- First applications
- April 2027
- First sales
Pre-registration is planned to provide eligibility and local cap information; it will not commit you to buying. It is not open on this page.
When the government opens its route, check the official eligibility and local cap, find a participating developer and qualifying home, and complete the scheme steps through the published channel. Arrange a mortgage with a participating lender and complete the legal purchase separately. The detailed application process has not yet been published.
- Build the deposit and a separate budget for fees, surveys and moving.
- Check your credit record and explore affordability using our borrowing calculator.
- Before paying a new-build reservation fee, ask whether the developer intends to participate and what happens if it does not.
- Recheck the official rules, lender list and local price cap before making a purchase decision.
How Extend Finance can help
Our English and Polish speaking advisers can review mortgage affordability, compare available lending routes and help you prepare while the government finalises the scheme. Once participating lenders and full rules are known, we can assess options for your circumstances. We do not decide scheme eligibility, allocate homes or approve the government application. Any mortgage advice fee is disclosed before you decide to proceed. An initial consultation is free and without obligation.
Discuss your first-home plans
Speak to an Extend Finance adviser about your mortgage options. This contact form is not a government scheme application or pre-registration.
Sources checked 28 October 2026: GOV.UK scheme guidance and Budget 2026. This is general information, not personal advice. The published terms may change before applications open.
FAQ
Frequently asked questions
When and where can I apply for Your First Home?
Applications are not open. GOV.UK plans buyer pre-registration by the end of December 2026 and applications from February 2027; the first sales are planned for April 2027. The government has not yet published the full application route, so an enquiry to Extend Finance is neither a government application nor pre-registration.
How much of my own money will I need?
The announced minimum deposit is 2.5% of the purchase price: £7,500 on a £300,000 home. You also need a separate budget for legal work, a survey, possible mortgage fees, moving and ongoing home costs. The deposit alone is not the full amount needed to buy.
Which homes and areas will the scheme cover?
It is intended for eligible new-build homes in England from developers that join the scheme, within a local price cap. The property must be your main home; older homes and homes in Scotland, Wales or Northern Ireland are outside this programme. The full list of local caps and participating developers is still to be published.
Do I have to repay the government equity loan, and how is the amount worked out?
Yes. The loan starts at 20% of the purchase price, but the normal repayment is 20% of the home’s value when you settle it, based on an independent valuation. For example, a £60,000 loan on a £300,000 home becomes £64,000 to repay if the home is later worth £320,000; it could also fall if the value falls. Full rules for earlier part or full repayment are still to come.
What will the equity loan cost after the interest-free period?
There is no interest on the government equity loan for five years; the announced rate is 1.5% in year 6 and 3% from year 7. On a £60,000 loan, that illustrates £75 and £150 per month, separately from your mortgage payment to the bank. Paying that interest does not reduce the equity-loan capital you will have to settle. Collection details have not yet been published.
What happens to the equity loan when I sell my home?
You will normally repay it when you sell, using the home’s value at that time rather than simply returning the original cash amount. If the home is valued at £280,000, 20% is £56,000; you must also settle any remaining mortgage and selling costs. Detailed valuation, fee and sale procedures will be published before applications open.
What is the income limit, and will the bank still check my mortgage?
The announced household income limit is normally £110,000 a year outside London or £140,000 in London. A participating lender will separately check your income, spending, credit record and ability to make mortgage repayments. Being below the income cap does not guarantee a mortgage or a place in the scheme.
What if I owned a home in Poland or another country before?
The full Your First Home definition of a first-time buyer has not yet been published, so past ownership abroad cannot be ruled in or out from the current guidance. Tell your adviser about any house, flat or inherited share you have owned and check the final government rules before relying on eligibility. The rules of this scheme may differ from those for SDLT relief and the Lifetime ISA.
Can I apply with a visa, settled status or pre-settled status?
The current scheme guidance does not yet say which nationality or immigration statuses qualify. You will need to check the final government criteria and the participating lender’s separate mortgage policy when they are published. A visa or settled status alone does not guarantee eligibility, and buying a home does not grant a right to live in the UK.