Last checked: 28 October 2026. The Government has now confirmed the main rules and timetable for Your First Home, its new England-only equity-loan scheme for some first-time buyers. It is designed for people who would not otherwise be able to buy a residential property. It is not a general 2.5% deposit mortgage, and the scheme will still depend on the final delivery arrangements, participating developers, participating lenders and the buyer meeting the rules.
Your First Home at a glance
What Budget 2026 confirmed
- England-only scheme for eligible first-time buyers.
- A 20% government equity loan.
- A 2.5% minimum deposit, with a maximum deposit of 15%.
- A five-year interest-free period on the equity loan, followed by a gradual increase.
- Household income caps of £110,000 outside London and £140,000 in London.
- Pre-registration by the end of December 2026, full applications from February 2027 and the first loans from April 2027.
Still important to check
- The property must fall within the relevant local-authority price cap.
- The home is expected to be a participating new build, with developer and lender participation required.
- Funding will be capped annually, so availability may not be unlimited.
- The scheme is subject to the necessary legal and regulatory arrangements.
The short version
Your First Home will have a £4.7 billion Government-backed budget and is expected to help around 70,000 households in England, supporting an estimated 20,000 new homes. An eligible buyer may use a 20% equity loan and a deposit of at least 2.5%, with the remaining borrowing arranged through a mortgage. The Government says the equity loan will be interest-free for five years, with costs increasing gradually after that.
That does not mean every first-time buyer can buy with £2,500 saved, or that every new build will qualify. Affordability, credit history, property details, lender criteria and the scheme rules will still matter.
Who is the scheme aimed at?
The scheme is for first-time buyers in England who would not otherwise be in a position to purchase a residential property. The household income cap is £110,000 outside London and £140,000 in London. The Budget also says price caps will be based on local-authority median prices, so the relevant cap will depend on where the property is. The Budget gives London examples of £650,000 for inner London and £500,000 for outer London, but that does not set the cap for Alsager, Cheshire East or any other local authority.
How much deposit will I need?
The minimum deposit is set at 2.5%, and the maximum deposit allowed under the scheme is 15%. A larger deposit may still affect the mortgage available, the interest rate and the monthly payment, so the 2.5% figure should not automatically be treated as the right target for every buyer.
There are also costs beyond the deposit, including legal work, searches, a survey, moving costs and possible reservation fees. You would need to budget for those separately.
How does the 20% equity loan work?
The Government will provide an equity loan of up to 20% of the property price. The Budget says the loan will have a five-year interest-free period, followed by a gradual increase. The exact repayment mechanics, later costs and any conditions attached to the loan should be checked against the scheme’s formal rules when they are published.
Developers will be expected to contribute when they sign up, on a sliding scale intended to protect smaller developments. The scheme will be delivered initially by Homes England, drawing on the National Housing Bank, with funding capped each year.
When can I register or apply?
- By the end of December 2026: pre-registration is expected to open.
- From February 2027: full applications are expected to open.
- From April 2027: the first loans are expected to be issued.
These dates are the Government’s stated timetable. They are not a guarantee that an individual buyer, home, developer or lender will be ready on that date.
What has changed for deposit savers?
The Government will introduce a new First Time Buyer ISA from April 2029, replacing the Lifetime ISA for new savers from 6 April 2029. It will allow contributions of up to £4,000 a year and a 25% Government bonus towards a qualifying first home worth up to £450,000. The maximum bonus will be capped at £20,000 and there will be no upper age restriction.
Existing Lifetime ISA holders can continue contributing and using their accounts under the current rules. From 29 October 2026, the withdrawal charge for an existing LISA holder buying a qualifying first home above the £450,000 property-price cap is reduced from 25% to 20%. The 25% charge for unauthorised withdrawals remains.
Does this guarantee a mortgage?
No. The scheme does not remove the need for a lender to assess affordability, credit history, income, outgoings and the property. A 2.5% deposit is the scheme minimum, not a promise that a buyer will qualify or that a lender will offer a particular rate.
What should first-time buyers do now?
There is no need to rush into a reservation simply because the Budget has been announced. Keep building a realistic deposit and separate budget for buying costs, check your regular outgoings and credit history, and understand what monthly payment would be comfortable. If you are considering a new build, ask whether the developer expects to participate, but treat any sales information as provisional until the formal scheme rules are available.
For a personal view of your likely borrowing and costs, a mortgage conversation can help you understand your position. It cannot confirm Your First Home eligibility before the formal rules and lender arrangements are available.
Questions people are asking
Is Your First Home open now?
Not for full applications. The Budget says pre-registration is expected by the end of December 2026, full applications from February 2027 and first loans from April 2027. The scheme also depends on the necessary legal, regulatory, developer and lender arrangements.
Can I buy any property with a 2.5% deposit?
No. Your First Home is aimed at eligible first-time buyers in England and is expected to focus on participating new builds. Income and local-authority price caps apply, and the mortgage lender will still assess affordability and the property.
What is the income limit?
The Budget sets the household income cap at £110,000 outside London and £140,000 in London. This is only one part of the eligibility assessment.
What happens to my Lifetime ISA?
Existing LISA holders can continue under the current rules. From 29 October 2026, the withdrawal charge for a qualifying first-home purchase above £450,000 is reduced to 20%. A new First Time Buyer ISA for new savers is planned from April 2029.
Useful next reading
- How much deposit do I need? — deposit size and the other costs to plan for.
- First-time buyer roadmap — the buying journey from saving to getting the keys.
- Cost of moving calculator — an estimate of costs beyond the deposit.
- Stamp duty calculator — check the current SDLT position for your purchase.
Update record
- 28 October 2026: updated against the HM Treasury Budget 2026 document. Added the confirmed scheme rules, income caps, deposit range, timetable, equity-loan costs and ISA changes.
- 28 September 2026: rechecked against the Government announcement before the Budget.
- 27 September 2026: first factual update published.
