Your First Home scheme: how the proposed 2.5% deposit and equity loan could work

The government's 26 September press release describes a planned equity loan for first-time buyers who would otherwise struggle to afford their first home. It is England-only, applies to a new-build property from a developer signed up to the scheme, and is expected to support a 2.5% deposit alongside a 20% government-backed equity loan. It also promises an initial interest-free period, a household income cap and local property price caps. Developers are expected to contribute towards the scheme's costs.

The announcement does not give the income or property caps, the length of the interest-free period, the subsequent interest or fees, the repayment formula, lender criteria, an application process or a launch date. Those details matter as much as the headline deposit.

If the final rules follow the percentages in the announcement, a purely illustrative £300,000 purchase would look like this:

For comparison, a conventional 95% mortgage on the same £300,000 home would require a £15,000 deposit and a £285,000 mortgage.

A 77.5% mortgage may also be priced differently from a 95% mortgage, depending on the lender and product — the example deliberately assumes the same 5% rate for both and is not a comparison of actual available deals.

This is not a product quote or a total cost comparison: real rates, terms, equity loan charges, eligibility and property values may differ. You would still owe the equity loan, and its eventual repayment cost could change with the property's value depending on the final rules. The government has not confirmed the repayment terms.

Use our mortgage repayment calculator to test a mortgage amount and term, then ask us to compare the full costs once the scheme is published.

Deposit is not the only cash you may need. Budget separately for conveyancing, searches, survey or valuation, moving costs, any applicable stamp duty, and a contingency. The government's current stamp duty guidance explains first-time buyer relief in England; eligibility and the purchase price matter. Our stamp duty guide provides context, but check current rates against GOV.UK before relying on any older examples.

No. The proposed 20% is an equity loan, not a cash gift. The government has said there would be an initial interest-free period, but has not yet disclosed how long it lasts, what charges follow, whether repayment tracks a percentage of the home's future market value, or how redemption and remortgaging will work. Do not assume the old Help to Buy terms will apply. We will update this guide when the official terms are released.

The smaller mortgage could reduce initial monthly mortgage payments compared with borrowing more on a conventional mortgage. Whether the scheme is cheaper overall will depend on the actual mortgage deal, future equity loan costs, property value, and how long you keep the home. A new build's price and any leasehold or estate charges also need checking.

The published outline points to first-time buyers in England buying an eligible new build through a participating developer, subject to a household income cap and a local property price cap. The government has not yet published the numerical caps or full qualification rules. It has also not confirmed whether particular visa statuses, previous ownership overseas, gifted deposits, joint applicants, or new-build flats will be treated differently. A mortgage lender would separately assess income, spending, credit history and the property.

If you already have a development in mind, ask the builder whether it plans to participate, but treat any answer as provisional until the scheme is formally launched. For a grounded view of your current borrowing position, use our affordability calculator and then book an initial conversation. An online estimate is not a lender decision.

No. The similarly named schemes work differently:

Your First Home may also be worth comparing with a standard 5% deposit mortgage and, where eligible, Shared Ownership. A lower upfront deposit does not automatically mean a lower lifetime cost. Our government homebuyer schemes guide gives a wider overview, but this new announcement should be judged on its eventual official terms.

That depends on your deposit, the sort of property you want and your timeframe. If you need an existing home, the announced proposal is aimed at participating new-build developments. If you have enough for a conventional mortgage today, waiting has a cost and an opportunity cost: property availability, mortgage rates and your own circumstances can all change. If a 5% deposit is currently your main obstacle and a suitable new build interests you, it may be sensible to prepare now and compare the scheme once the full rules appear.

We can map out two realistic routes with you: what you may be able to do now, and what would have to be true for Your First Home to help later. This is more useful than reserving a property on unconfirmed assumptions.

1. Work out your full budget. Add your deposit and buying costs. Start with our mortgage affordability calculator and monthly repayment calculator. The calculator hub also lets you explore how term affects payments.
2. Check the property route. Decide whether you would consider a new build from a developer signed up to the proposed scheme, or prefer to search more widely. Read our first-time buyer mortgage page for help with the wider process.
3. Found a new-build plot? Send us the developer, development and plot details before you reserve. Our new-build mortgage guide includes a pre-reservation plot checklist and a short enquiry form, and explains that a developer's participation in Your First Home cannot be assumed until it is officially confirmed.
4. Get an adviser to check real mortgage options. Tell us your household income, available deposit, commitments, preferred location and any property you are considering. We can assess the lender side now without promising scheme eligibility.
5. Revisit the comparison after the Budget. Once the government publishes the income and property caps, equity loan terms, costs, start date and participating developers and lenders, compare the total costs and risks against a conventional mortgage and any other suitable option.