Politics · United Kingdom · 12 hrs ago
Your First Home scheme offers a 2.5% deposit, but buyers weigh the risks
Your First Home would help eligible first-time buyers purchase a new-build home with a deposit as low as 2.5%, using a government-backed loan worth 20% of the price.
The scheme applies in England, with a higher income limit for homes in London than elsewhere.
The lower deposit could help renters who struggle to save, including people in London who spend a large share of their income on rent.
But buyers still need a mortgage for most of the home’s cost, and a mortgage broker warned that this could be out of reach for some lower earners, especially single buyers.
Some buyers worry the extra loan could become costly when its initial interest-free period ends, though its length has not been specified.
The scheme is similar to Help to Buy, which faced criticism that it could push up house prices by helping wealthier buyers borrow more.
Further details are expected from the government, including how the scheme will work in practice.
Your First Home will let eligible first-time buyers in England buy a new-build home with a deposit as low as 2.5% and a government-backed equity loan worth 20% of the price.
The scheme has £4.7bn of funding over five years and is intended to help 70,000 households.
Buyers will need a standard mortgage for the remaining 77.5% of the purchase price.
The equity loan will be interest-free for five years, with interest charges starting in year six.
Some prospective buyers and mortgage experts warn that mortgage affordability and later interest charges could make the scheme risky or inaccessible.
- Who
- Eligible first-time buyers in England buying a new-build home from a participating developer.
- What
- A government-backed equity loan of 20% of the purchase price, with a minimum deposit of 2.5%.
- When
- Further details were revealed in the Budget on 28 October 2026. Pre-registration is scheduled to open by the end of December, with applications from February 2027.
- Where
- England. The scheme includes different household income and property price caps for London.
- Why
- To help first-time buyers who lack family financial support buy a home.
Government
Cautious prospective buyers
Affordability
Government
The government says the scheme could help first-time buyers purchase a home and save hundreds of pounds a month compared with a standard mortgage.
Cautious prospective buyers
Luke Anstee said it could help people buy, but worried that taking on another loan was a gamble.
Long-term cost
Government
The equity loan will be interest-free for five years, with interest set at 1.5% in year six and 3% from year seven.
Cautious prospective buyers
Anstee warned that interest on the loan could make the scheme a poor choice in the long run.
Access
Government
Ministers say income and property price caps will focus support on eligible buyers.
Cautious prospective buyers
Tembo warned that some lower earners may be unable to borrow enough to cover the remaining 77.5% of the price.
The government announced the Your First Home scheme.
Chancellor John Healey revealed further details of the scheme in the Budget.
Customer pre-registration is scheduled to open.
Customer applications are scheduled to begin.
The first loans are scheduled to be issued.
- Minimum deposit
- 2.5% of the purchase price
- Government equity loan
- 20% of the purchase price
- Buyer mortgage
- 77.5% of the purchase price
- Funding
- £4.7bn over five years
- Target
- 70,000 households
- London income cap
- £140,000 a year for the household
4 sources
What people are saying
hundreds of pounds a month
I don't want to add more loans
I think it would help people get onto the property ladder but, in the long run, it is not a good idea.
The option for a 2.5 per cent deposit is really quite exciting because saving is definitely the biggest hurdle