BUDGET 2026: ‘Your First Home’ Scheme to help first-time buyers

Struggling to save a deposit for your first home? A new government scheme could make buying a property more achievable, allowing eligible first-time buyers to purchase a new-build home with a deposit of just 2.5%.

Chancellor John Healey confirmed £4.7 billion of government-backed funding for the Your First Home scheme, which aims to help around 70,000 people onto the property ladder.

How will the scheme work?

The scheme will provide eligible buyers with a government equity loan worth 20% of the property’s purchase price. The loan will be interest-free for the first five years.

This means buyers will need a smaller mortgage than they would otherwise, potentially reducing their monthly repayments. You’ll still need to take out a repayment mortgage with a participating lender, which will carry out affordability and credit checks.

For example, if you bought a £300,000 home, you could put down a £7,500 deposit (2.5%), receive a £60,000 government equity loan and take out a £232,500 mortgage. Without the scheme, a typical 95% mortgage would require a £15,000 deposit.

Who will be eligible?

The scheme is designed for first-time buyers purchasing eligible new-build homes in England who would struggle to buy without support.

Household income must be no more than £110,000 a year outside London or £140,000 within London. Property price caps will also apply, varying by local area, with separate limits for inner and outer London.

The government will publish the full list of eligible properties, participating developers and lenders before applications open.

When can you apply?

The scheme is expected to open for applications in February 2027, with the first property sales planned for April 2027. Pre-registration is expected to open before the end of 2026.

What this means for you: If saving a deposit is your biggest barrier to homeownership, the scheme could help you buy sooner. However, you’ll still need to pass mortgage affordability checks and budget for your ongoing housing costs. It’s also worth comparing the scheme with other routes to buying before deciding whether it’s right for you.