Your First Home scheme offers 2.5% deposits for eligible buyers

Chancellor John Healey has outlined a £4.7bn homebuying programme intended to help around 70,000 households in England purchase their first property. Your First Home will combine smaller deposits with government equity loans, offering eligible buyers a route into ownership with less conventional mortgage borrowing.

Announced by Andy Burnham last month, the scheme targets buyers who would struggle to purchase without assistance, including those without family financial support. Healey set out further details in his first budget on Wednesday, saying participants could save hundreds of pounds a month.

Under the programme, buyers purchasing eligible new-build homes from participating developers will receive a government equity loan covering 20% of the price. The minimum deposit will be 2.5%, while deposits cannot exceed 15%, according to the government's Budget document.

Eligibility will depend on both household earnings and the property being purchased. Annual household income must not exceed £110,000 outside London or £140,000 within the capital, with local price ceilings determining which homes qualify for support.

The announced purchase limits are £650,000 in inner London and £500,000 in outer London. The government says caps elsewhere will reflect local authority median prices, making the location of a purchase an important factor alongside a household's income and available savings.

Government guidance illustrates the financing through a £300,000 purchase: a buyer could contribute £7,500, receive a £60,000 equity loan and take a £232,500 repayment mortgage. A conventional purchase using a 95% mortgage would instead require a £15,000 deposit and £285,000 in mortgage borrowing.

The equity loan will carry no interest for five years, but that initial period does not make it a grant. Published guidance sets interest at 1.5% in year six and 3% from year seven, with those payments separate from the mortgage and not reducing the equity loan balance.

The government's monthly payment comparison also comes with qualifications. Its illustration assumes a particular mortgage rate and repayment term, rather than a personalised offer, and excludes other ownership expenses such as insurance, council tax, maintenance and any service or estate charges.

The distinction matters because a smaller deposit addresses only part of the challenge of buying a home. Participating lenders will still conduct affordability and credit checks, while the guidance says buyers must use the property as their main residence; meeting the income ceiling alone will therefore not guarantee access.

The next stage is implementation rather than immediate purchases. The Budget schedules pre-registration by the end of December 2026, full applications from February 2027 and the first loans from April, while government guidance says further eligibility rules and information about participating lenders and developers will be published before applications open.