Your First Home – 2.5% Deposit + 20% Interest-Free Government Equity Loan

Overview

Your First Home is a new £4.7 billion government scheme, confirmed in the Budget on 28 October 2026, to help first-time buyers in England who don't have a big deposit (or the "bank of mum and dad") get onto the property ladder.

You put down as little as 2.5% of the price, the government lends you 20% as an equity loan, and you only need a mortgage for the rest. The government loan is interest-free for the first 5 years. It's aimed at around 70,000 first-time buyers and works like the old Help to Buy equity loan (2013–2023), but with a much smaller deposit.

Not open yet. Pre-registration opens by the end of December 2026, full applications from February 2027, and the first loans from April 2027. Some details (full price caps, how repayment works, participating developers and lenders) are still to be published — we'll update this page as they are.

How It Works

• Because the government covers 20%, your mortgage is a much smaller share of the home's value — so you get cheaper mortgage rates than a 95% mortgage would offer
• Years 1–5: nothing to pay on the government loan
• Year 6: interest of 1.5% of the loan, then 3% from year 7 (rates reported by MoneySavingExpert — the Budget itself only says a "gradual increase" after five years, so check the final terms)
• The government owns a share of your home's value, not a fixed sum — if prices go up, you pay back more; if they go down, you pay back less

Calculator

Put in a home price and deposit to see your monthly payment, the government loan and the cash you'll need upfront.

What It Costs at Different Prices

With the minimum 2.5% deposit:

With the maximum 15% deposit:

*Deposit + first-time buyer stamp duty (nothing up to £300,000, then 5% up to £500,000) + about £3,300 for a solicitor and mortgage broker. Monthly figures assume a 30-year repayment mortgage at an example rate of 5.24% — a smaller mortgage relative to the home's value often gets a cheaper rate.

When you sell or repay, you owe 20% of the home's value at the time — so on a £400,000 home, if it's worth £440,000 that's £88,000; if it's worth £380,000 it's £76,000.

Who Can Use It

• First-time buyers in England (never owned a home before)
• Buying a new-build home from a developer signed up to the scheme (list published before applications open)
• The home must be your main residence — not to let out
• Household income up to £110,000 (outside London) or £140,000 (in London)
• Deposit between 2.5% and 15% of the price
• Mortgage from a participating lender
• No age limit

Price Caps

Caps are set by local authority, based on local median prices. The London caps are confirmed in the Budget; the others are as reported by MoneySavingExpert:

The full list for every council area is due "over the coming weeks".

How to Claim

1. Now: start saving your 2.5% deposit (a Lifetime ISA adds 25% on top — see Tips) and check your credit file
2. By end of December 2026: pre-register your interest — this doesn't commit you to buying through the scheme
3. From February 2027: full applications open; find a new-build from a participating developer and get a mortgage agreement in principle from a participating lender
4. From April 2027: first equity loans are paid out and purchases complete

Click 'Get This Offer' for the official GOV.UK announcement — we'll switch the link to the registration page as soon as it's live.

Paying It Back

• You don't have to repay the equity loan until you sell the home — or earlier if you choose
• If you don't sell, it must be repaid before you finish paying off your mortgage
• The amount is always the same percentage of the home's value at the time (20% if you've repaid nothing)
• The exact repayment rules (including part-repayments) will be published by the end of 2026

Important Terms

• It's a loan, not free money — the government shares in any rise in your home's value
• New-builds only, and only from signed-up developers — new-builds often sell at a premium and can lose value in the first few years, so compare the price with similar resale homes nearby
• Funding is capped each year, so popular areas may run out — getting in early matters
• Under the old Help to Buy, special scheme mortgages were often pricier than lenders' standard deals — compare carefully once lenders publish rates
• Your costs rise after year 5, so budget for the interest step-up (or plan to repay before then)
• England only — Scotland, Wales and Northern Ireland run their own schemes
• Run by Homes England at first, moving to the new National Housing Bank later

Tips

• Pair it with a Lifetime ISA. You can use a Lifetime ISA towards the deposit and the government adds 25% — £4,000 saved becomes £5,000. Open one at least 12 months before you buy. Lifetime ISA money is penalty-free only for homes up to £450,000; above that (e.g. in inner London) withdrawing costs a 20% charge from 29 October 2026, so check your target price first
• Pre-register as soon as it opens — it's free and doesn't commit you
• Get a mortgage broker who knows the scheme once lenders sign up
• Think about years 6+. Many Help to Buy owners remortgaged around year 5 to pay off the loan before interest kicked in — plan for this from day one
• Get a snagging survey on any new-build before you complete