Your First Home scheme: first-time buyers could need just a 2.5% deposit

The government announced plans on 26 September 2026 for a scheme to help first-time buyers in England purchase a newly built home. 

Called Your First Home, it is expected to allow eligible buyers to put down a deposit of 2.5%. 

The scheme has not launched, so buyers cannot apply yet. Read the government announcement.

The small deposit is the eye-catching part. Buyers would still need a mortgage and would owe money through a separate government loan. 

Here is what has been announced so far, and what remains unclear.

How would Your First Home work?

Under the government’s plans, a first-time buyer would put down a deposit of around 2.5% of the price of an eligible new-build home. 

A government-backed equity loan worth 20% of the property’s value would help pay for it. The buyer would need a mortgage for the rest.

An equity loan is money you borrow towards the cost of the home. It is not a free gift or a discount. 

The government says the loan would be interest-free at first, but has not said how long that period would last or what it would cost afterwards.

What could a 2.5% deposit look like?

Take a £200,000 new-build home as a simple example:

• Buyer’s 2.5% deposit: £5,000
• Proposed 20% government equity loan: £40,000
• Mortgage needed for the remaining 77.5%: £155,000

These figures show how the purchase price could be split if the announced percentages apply. They do not include other buying costs, and they do not tell us what the monthly mortgage payment or later equity-loan costs would be.

For comparison, a 5% deposit on the same £200,000 home would be £10,000. The proposed deposit would be £5,000 lower, but the government loan would still have to be dealt with later.

Who could qualify?

The proposed scheme is for first-time buyers in England purchasing a new-build home from a developer that signs up. 

The government says it plans to set a limit on household income and local limits on eligible house prices. It has not published the figures for those limits yet.

That means someone cannot tell from the 2.5% figure alone whether they would qualify, or whether a particular home would be covered.

What has not been confirmed?

The government says the Chancellor will give further details at the Budget in October 2026. 

We are waiting for the full eligibility rules, the length of the interest-free period, later loan charges, how and when the equity loan must be repaid, the application process and the date buyers can start using the scheme.

The government suggests some buyers could pay hundreds of pounds less each month than with a 95% mortgage. 

That is not a promise about any individual buyer’s costs. A fair comparison will need the mortgage terms and the full equity-loan rules.

Is this the same as the First Homes scheme?

No. The existing First Homes scheme offers eligible first-time buyers in England a discount of at least 30% on certain homes. Your First Home is a separate proposed scheme built around a smaller deposit and a government equity loan. 

Do not use the current First Homes income limits as a guide to the new scheme; its limits have not been announced.

Can I apply now?

No. The government has announced the plan, but has not given an opening date or published an application route. 

If you are hoping to buy, you can keep saving for your deposit and the other costs of moving. 

If small amounts are easier to set aside, our 1p saving challenge is one way to start. Wait for the Budget rules before deciding whether Your First Home is an option for you.