Your First Home Scheme Mortgages: All You Need to Know About the Help to Buy Replacement

First-time buyers facing steep property prices and high deposit hurdles received a major policy announcement as Prime Minister Andy Burnham and Chancellor John Healey unveiled "Your First Home". Billed as a modernised revival of the former Help to Buy scheme, this national housing initiative is designed to help buyers acquire a new-build property with a deposit of just 2.5%, supported by a 20% government-backed equity loan.

Important Status Update: The "Your First Home" scheme is not live yet. It is currently a proposed government initiative. Full operational framework details, regional price caps, developer rules, and income limits will be presented by Chancellor John Healey in the Autumn Budget on October 28, 2026. Pre-registration portals are expected to open by late 2026, with formal application processing and loan drawdowns following. We will update this page when full information is available.

This guide breaks down everything we know so far about how the scheme is designed to work, who will qualify once it launches, how it compares to existing low-deposit options, and how prospective buyers can prepare ahead of the official rollout.

What is the My First Home Scheme?

The "Your First Home" is a government-backed equity loan initiative targeted at first-time buyers who lack access to substantial personal savings or financial backing from the "Bank of Mum and Dad".

Under the policy:

• Buyers contribute an upfront cash deposit of 2.5%.

• The government provides an equity loan covering 20% of the property’s purchase price, featuring an initial interest-free period.

• The homebuyer secures a standard residential mortgage from a participating bank or building society for the remaining 77.5%.

The initiative aims to address both consumer affordability and housing supply. Funded by reprioritising existing government budgets alongside participation fees paid by housebuilders, the scheme is structured to give developers the commercial confidence to accelerate construction on new-build sites across England.

How It Works

By combining a 2.5% buyer deposit with a 20% government equity loan, the scheme lowers the borrowing ratio required from high-street mortgage lenders. Because commercial banks are only underwriting 77.5% Loan-to-Value (LTV) rather than a risky 95% or 97.5% LTV, buyers unlock lower interest rates than traditional low-deposit products.

Financial Example (Expected Structure):

On a new-build property priced at £240,000:

• Buyer 2.5% Deposit: £6,000

• Government 20% Equity Loan: £48,000

• 77.5% First Mortgage: £186,000

• Total Purchase Value: £240,000

Repaying the Equity Loan

The 20% government equity loan is tied directly to the future market value of your home, rather than a fixed cash debt.

• If property value rises: If you buy a home for £240,000 with a £48,000 equity loan and later sell it for £300,000, you must repay 20% of the new valuation (£60,000).

• If property value falls: If the property drops in value to £200,000, the 20% repayment drops proportionally to £40,000.

During the initial introductory period (expected to be 5 years, mirroring historic equity loan models), no interest fees are charged on the government loan, keeping early monthly payments lower. After the interest-free period expires, an annual management fee kicks in and scales each year until the equity loan is repaid or the property is sold.

Eligibility (Who Will Qualify?)

While full regulatory criteria will be confirmed in the October 2026 Budget, the core eligibility parameters outlined by the government include:

• First-Time Buyer Status: All applicants on the mortgage must be genuine first-time buyers who have never owned a residential property in the UK or abroad.

• Primary Residence Only: The property must be purchased as your sole home. Second-home buyers and Buy-to-Let investors are strictly excluded.

• Property Type: Restricted exclusively to new-build residential properties built by registered housebuilders participating in the scheme.

• Maximum Purchase Price: Capped up to £600,000 nationally, though regional price bands (e.g., lower caps in Northern regions vs. Higher caps in London/South East) are expected to be announced in the Budget.

• Income & Affordability Rules: Applicants must pass standard mortgage affordability stress testing on the 77.5% main mortgage under FCA guidelines, subject to maximum household income thresholds established by the government.

Your First Home vs. Alternative First-Time Buyer Schemes

Below you will find a quick comparison of the proposed new scheme with alternatives such as Freedom to Buy, Shared Ownership and Skipton Building Society's 100% LTV products.

Pros & Cons of the Proposed Scheme

Below you will find a rundown of the advantages and disadvantages of the proposed scheme based on what has been announced about it so far.

Pros

• Ultra-Low Savings Threshold: Cutting the deposit requirement to 2.5% allows buyers to buy years faster than waiting to save a standard 5% or 10% cash pot.

• Cheaper Commercial Mortgage Rates: Borrowing at 77.5% LTV gives buyers access to lower interest rate bands than standard 95% low-deposit mortgages.

• Initial Interest-Free Relief: The 20% equity loan carries an initial fee-free window, reducing total monthly outgoings during the first few years of ownership.

• Spurs Energy-Efficient New Housing: Restricting the scheme to new builds ensures buyers move into energy-efficient homes with lower utility costs.

Cons

• Not Available Today: The scheme cannot be accessed immediately, as legislative and registration frameworks are still pending.

• Excludes Existing Homes: Cannot be used to buy pre-owned, character, or established properties on the open resale market.

• Surrendering Equity Growth: The government owns a 20% share in your property. If your home grows significantly in value, buying back that 20% later will cost considerably more than the original loan amount.

• Future Fee Increases: Once the initial interest-free period ends, annual fees begin accruing on the unpaid equity loan balance.

Expert Broker Verdict

How to Prepare for the Launch (Next Steps)

While you cannot apply for the "Your First Home" scheme today, prospective buyers can take proactive steps now to prepare for when pre-registration opens:

1. Monitor the October 28 Budget: Watch for Chancellor John Healey's formal presentation, which will publish exact regional price caps, income limits, and participating developer lists.

2. Save the 2.5% Deposit Plus Closing Costs: While saving 2.5% for the property deposit, make sure you also hold emergency cash for legal conveyancing, valuation fees, and stamp duty thresholds

3. Audit Your Credit Record: Lenders will still run rigorous credit checks for the 77.5% commercial mortgage. Ensure you are registered on the Electoral Roll, keep credit card balances low, and avoid opening new Buy-Now-Pay-Later or personal credit accounts.

4. Track Regional New-Build Developments: Research active new-build construction sites in your target area. Only developers registered under the scheme will be eligible once portals open.

5. Get a Pre-Launch Assessment from a Broker: Speak with a whole-of-market broker to evaluate your income against current 77.5% LTV stress tests so you are ready to move fast when pre-registration launches.

Want to find out more about your mortgage options as a first-time buyer? Get started here to book a free, no-obligation chat with a broker who can run through them with you and help you decide whether to wait for Your First Home to go live or proceed with one of the alternatives.