Update: 27 September 2026. The Government has announced a proposed new scheme called Your First Home. It is intended to help some first-time buyers in England purchase a new-build home with a smaller deposit. It has not opened for applications, and the final rules are still to be confirmed at next month’s Budget.
The short version
Based on the Government’s announcement, the scheme is expected to support a 2.5% deposit alongside a 20% government-backed equity loan. It would be for prospective first-time buyers purchasing a new-build property from a developer signed up to the scheme.
The Government says the equity loan would have an initial interest-free period. It has not yet confirmed how long that period would last, what costs may apply afterwards or how the loan would be repaid.
What has been announced
- The scheme is planned for England.
- It is intended for first-time buyers.
- The property would need to be a new build from a developer participating in the scheme.
- The announcement expects a 2.5% deposit and a 20% government-backed equity loan.
- The loan is expected to have an initial interest-free period.
What has not been confirmed yet
This is the important bit. The announcement is not the final scheme rulebook. The Government says that the household-income cap and local property-price caps will be set out at the Budget. It has also said that costs and implementation timing will follow then.
That means we do not yet know the final eligibility rules, the exact price limits for this area, which developers will participate, how lenders will assess applications, the detail of any later loan costs, or when someone will be able to apply.
Does this mean you can buy with only 2.5% saved?
Not necessarily. A 2.5% deposit is part of the announced design, not a promise that every buyer with that amount will qualify. A mortgage lender would still need to assess affordability, credit history and the property. The final scheme rules may also limit who can use it and the value of the property they can buy.
It is also worth remembering that a new home can bring other costs, such as legal fees, valuation or survey costs, moving costs and any reservation fee. Those costs are separate from the deposit.
What it could mean for first-time buyers
If the final scheme works broadly as announced, it could reduce the amount some buyers need to save for the deposit. That may be useful for people whose income would support a mortgage but who are finding the deposit barrier hard to clear.
It will not automatically make a home affordable, and it will not apply to every property. The scheme is aimed at new builds, with developers expected to sign up. It should therefore be viewed as one possible route once the full detail is published, not as a reason to reserve a property before the rules are known.
What to do now
There is no application to make today. The sensible next step is to wait for the Budget detail and keep preparing in the usual way: understand your likely deposit position, keep an eye on regular outgoings and credit, and be clear about the total cost of buying rather than the deposit alone.
When the full rules are available, the key questions will be whether you meet the income and property-price limits, whether the developer is part of the scheme and whether the mortgage is affordable for you. This page will be updated when the Government publishes the final terms.
