If you've been saving for a deposit and a 5% target still feels years away, a new government scheme may bring your first home closer than you thought.
On 26 September 2026 the government announced Your First Home, a scheme for first-time buyers in England. You would put down a 2.5% deposit on a new-build home, and a government equity loan would cover a further 20% of the price. On a £300,000 home, that's a deposit of £7,500.
The full rules won't be published until the Budget on 28 October, so for now there's a gap between the headline and the detail. This article sets out what has been confirmed, what hasn't, the risks to weigh and what you can do while you wait.
Whetheryou're waiting for the scheme or ready to buy now, our conveyancing team can talk you through your purchase before you commit.
What has been announced so far
Here's what the government has confirmed:
- The scheme is for first-time buyers in England buying a new-build home from a developer that has signed up to it.
- You pay a 2.5% deposit, the government lends 20% as an equity loan, and a mortgage covers the remaining 77.5%.
- The equity loan will be interest-free for an initial period.
- There will be a household income cap and local property price caps.
- Developers will pay a fee to take part.
- Pre-registration is expected to open by the end of 2026.
The government says the scheme is aimed at people who can't rely on family to help with a deposit, and that buyers could save hundreds of pounds a month compared with a 95% mortgage.
How the numbers could work
Take a £300,000 new build:
- your deposit: £7,500 (2.5%)
- the government equity loan: £60,000 (20%)
- your mortgage: £232,500 (77.5%).
With a standard 95% mortgage on the same home, you'd need a £15,000 deposit and would borrow £285,000. Under the scheme you would borrow £52,500 less from the bank, which is where the lower monthly payment comes from. Whether a lender will offer you the £232,500 still depends on its affordability checks, so a mortgage broker is the person to ask about your own figures.
Stamp duty is worked out on the full price, including the part paid with the equity loan. First-time buyers currently pay nothing on a home costing up to £300,000 and 5% on the part between £300,000 and £500,000, so a £350,000 new build would mean a £2,500 bill.
The equity loan has to be paid back
The 20% is borrowing secured on your home, and the government hasn't yet said how Your First Home loans will be repaid. The closest guide is the Help to Buy equity loan, which ran from 2013 to 2023 and which ministers say the new scheme will learn from. Under Help to Buy:
- the loan was interest-free for five years
- from year six you paid interest of 1.75%, rising each April by inflation (CPI) plus 2%
- you repaid the same percentage of the home's value at the time you paid it back, not the amount you borrowed
- the loan had to be repaid when you sold, paid off your mortgage or reached the end of the term, normally 25 years.
The third point catches people out. If you borrowed 20% on a £300,000 home and it's worth £330,000 when you sell, you'd repay £66,000. If it's worth £280,000, you'd repay £56,000.
You may see reports that Your First Home will also be interest-free for five years and cover homes worth up to £600,000. Those figures aren't in the government's announcement and match the old Help to Buy rules, so treat them as unconfirmed until the Budget.
What we don't know yet
The Budget should answer the questions most buyers will have:
- the level of the household income cap, and whether it's based on joint income
- the price cap for your area
- how long the interest-free period lasts and what the loan costs afterwards
- whether repayment will follow your home's value, as it did under Help to Buy
- whether 20% is a fixed amount or a maximum
- whether there's an age limit
- when you'll be able to complete a purchase using the scheme.
Your First Home is also a different scheme from First Homes, which already sells some new builds to local first-time buyers at a discount of at least 30%. First Homes has its own price and income caps, and the discount stays with the property when you sell.
The risks to weigh before you reserve
A smaller deposit lets you buy sooner. It doesn't make the home any cheaper, and a few risks deserve thought before you commit.
Start with the price. Research by reallymoving in 2019 found that first-time buyers using Help to Buy paid 10.3% more for new builds than buyers of new homes who didn't use the scheme. Compare the asking price with similar homes nearby, including resale homes outside the scheme.
Then think about what happens if prices fall. With 2.5% of your own money in the home, the cushion is thin. If repayment follows your home's value as it did under Help to Buy, a drop of just over 3% would wipe out your share and leave you in negative equity until you've paid off more of the mortgage. That can make remortgaging or moving harder.
The interest-free period will also come to an end. If the charges follow the Help to Buy pattern, they'll sit on top of your mortgage payment and rise every year until you repay the loan.
When you come to sell, your home will be a second-hand property, competing without a scheme to help the next buyer. The government's own evaluation of Help to Buy, published on 15 September 2026, found it helped many people buy but also contributed to higher prices in some less affordable areas.
Many new-build flats are leasehold, too. Service charges, ground rent and the lease terms all affect what you'll pay and how easily you can sell, and your solicitor should explain them before you exchange contracts.
Should you wait for the scheme or buy now?
That depends on what you want to buy. Your First Home will only cover new builds from participating developers, so if you've found a resale home you can afford, waiting months for a scheme that won't apply to it rarely makes sense.
If you want a new build and a 2.5% deposit is the difference between buying and not buying, it may be worth waiting for the detail. Just remember no one can buy through the scheme until it launches.
Other help is available now. Lenders in the government's Mortgage Guarantee Scheme offer 95% mortgages, First Homes and shared ownership homes are available in some areas, and a Lifetime ISA adds a 25% bonus to up to £4,000 a year of savings towards a first home costing up to £450,000. It hasn't been confirmed whether a Lifetime ISA can be used alongside Your First Home.
What you can do now
- Work out your household income and the price range you're looking at, so you'll know quickly whether you fall within the caps when they're published.
- Ask a mortgage broker what you could borrow at 77.5% of the price.
- Budget for the costs beyond the deposit: legal fees, searches, a survey, the reservation fee, stamp duty above £300,000, moving costs and furnishing an empty new build.
- Gather your ID, payslips and bank statements. If family are helping with part of your deposit, tell your solicitor at the start, as it isn't yet known how the scheme will treat gifted money.
- Choose your solicitor before you reserve.
That last point matters more with new builds. Developers usually expect contracts to be exchanged within a few weeks of reservation, and under Help to Buy the solicitor also had to deal with the scheme's own paperwork and deadlines. You don't have to use the solicitor the developer recommends. An independent solicitor acts only for you. They check the contract and any lease, what happens if the build runs late and your mortgage offer is close to expiring, the property searches and the terms of the equity loan. Our guide to how long conveyancing takes explains the stages.
If you'd like a quote in hand before you reserve, you can get one online.
We'll update this after the Budget
The Chancellor will set out the full rules on 28 October 2026. We'll update this article once they're published, including what the price caps mean for buyers in Kent, East Sussex and South East London.
How can we help now?
Burtons Solicitors helps buyers across Kent, London and East Sussex. If you're planning your first purchase, with or without the scheme, speak to our conveyancing team about your purchase and what it's likely to cost: get a quote online, email info@burtons-solicitors.com or call your nearest office.
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