Your First Home: Everything We Know So Far About the New First-Time Buyers Scheme

Your First Home: Everything We Know So Far About the New First-Time Buyers Scheme

The government has finally fleshed out how its new first-time buyer scheme will work. Here’s what you need to know.

Your First Home will give first-time buyers (FTBs) a helping hand to purchase new-build properties.

Up to £4.7 billion in government-backed lending will be made available via interest-free equity loans (covering 20% of the purchase price).

How will it work?

Eligible FTBs will be able to buy a new-build home in England with a deposit of at least 2.5% of the purchase price.

The government will provide an equity loan worth 20% of the purchase price, interest-free for five years.

The remaining cost of the property will be subject to a repayment mortgage from a participating lender.

Developers need to sign up to participate in the scheme.

When will it start?

Applications are likely to open in February 2027. More details about participating developers and lenders will be provided before then. Look out for further guidance and information about customer pre-registration in December.

What problem does it solve?

FTBs often struggle to save for a deposit, especially if they’re renting.

Those who can get on the ladder often do so with money gifted or loaned by a family member.

But not everyone has parents or grandparents who can help. Your First Home aims to help FTBs overcome this hurdle.

Who is eligible?

FTBs who plan to live in the property (it must be your main residence). Your total household income cannot exceed £110,000 if you live outside London, or £140,000 if you live in London.

You also need to secure a mortgage (for the rest of the purchase price) from a participating lender.

How much can I spend?

Price caps will apply to ensure the scheme supports only what the government calls ‘modest’ homes.

A list of price caps for each local authority area has not yet been published. However, example price caps include:

• Reading: £375,000
• North Devon: £320,000
• Manchester: £355,000
• Middlesbrough: £220,000
• Inner London: £650,000
• Outer London: £500,000*

Interest-free loan

After the five-year interest-free period on the 20% loan elapses, these rates will apply:

Year 6: 1.5%

From year 7: 3%.

The government has also clarified that the equity loan is linked to the home's value.

The guidance says: “If the loan was worth 20% of the purchase price when you bought your home, you will normally repay 20% of the home’s value when you repay the loan, based on an independent valuation.

“This means the amount you repay can go up or down as the value of your home changes.”

Considerations

As with any major financial decision, it’s important to understand what you’re signing up to (always read all the small print).

Consider how costs will change over time (when the interest-free period ends) and understand the rules on repaying the equity loan when you sell up.

As the scheme only applies to new-builds and the property can’t be let out at any time, consider whether this suits your lifestyle needs and aspirations.

Looking to buy for the first time? Call us for an update on the local market and to see properties that are available right now.

*Inner and Outer London as defined in the London Plan 2021