Your First Home Scheme: How the New2.5% Deposit First-Time Buyer Scheme Could Work

The government has announced a new first-time buyer scheme called Your First Home, which could allow eligible buyers in England to purchase a new-build property with as little as a 2.5% deposit.

For people currently exploring their first-time buyer mortgage options, this could potentially create another route onto the property ladder.

The government says the scheme is expected to provide a government-backed equity loan of up to 20% of the property value, with an initial interest-free period.

Full details are expected to be confirmed at the Budget.

You can read the official government announcement here.

TL;DR: What do we know about Your First Home?

The Your First Home scheme is expected to:

• Allow eligible first-time buyers to purchase with a 2.5% deposit
• Provide a government-backed equity loan of up to 20%
• Apply to qualifying new-build properties
• Be available in England
• Include an initial interest-free period
• Include household income limits
• Include local property price caps
• Require the developer to participate in the scheme

The government has said further information on costs, eligibility and implementation will be published at the Budget.

Will I have to repay 20% of the future value of my home?

We do not know yet.

This is probably one of the most important details first-time buyers need to watch.

Under the old Help to Buy Equity Loan scheme, if the government provided a 20% equity loan, the amount you eventually repaid was linked to 20% of the property’s value at the time of repayment, rather than simply repaying the original cash amount borrowed.

For example, imagine you bought a property for £300,000.

A 20% equity loan would initially be:

£60,000

If the property was later worth £400,000, 20% would be:

£80,000

Under a Help to Buy-style repayment structure, you could therefore have originally received £60,000 but later need to repay £80,000.

However, this is very important:

The government has not yet confirmed that Your First Home will use exactly the same repayment calculation.

That detail matters enormously and is one of the first things we will be looking for when the full scheme rules are published.

How will the Your First Home scheme work?

Based on the government’s announcement so far, a buyer could potentially contribute a deposit of just 2.5% of the property price.

The government could then provide an equity loan of up to 20%.

That means the buyer could potentially have 22.5% of the purchase price covered through their own deposit and the government equity loan before taking out the main mortgage.

For example, on a £300,000 property:

Buyer deposit at 2.5%: £7,500

Government equity loan at 20%: £60,000

Remaining amount to fund: £232,500

Subject to mortgage affordability and lender criteria, the buyer would therefore need a mortgage for the remaining amount.

This could make a significant difference because the mortgage lender would potentially be lending around 77.5% of the property’s value, rather than 95%, 98% or 100%.

If you’re trying to understand how much you may be able to borrow, our mortgage affordability calculator can give you an initial indication.

Is Your First Home the new Help to Buy?

There are certainly similarities, but I would not describe it as Help to Buy simply returning under a new name.

Help to Buy also combined a buyer’s own deposit, a government equity loan and a mortgage to help people purchase new-build properties.

The new Your First Home scheme is also expected to involve an equity loan and new-build homes.

But until the detailed rules are published, we do not know whether repayment, valuations, interest charges and the ability to repay the equity loan in stages will work in exactly the same way.

So, for now, I would describe Your First Home as similar in principle to Help to Buy.

Why could a 2.5% deposit help first-time buyers?

One of the biggest barriers we continue to see with first-time buyers is the deposit.

It isn’t always that somebody cannot afford the monthly mortgage payment.

Sometimes they simply cannot save a large enough deposit quickly enough.

Take a £300,000 property.

A 10% deposit would mean saving:

£30,000

A 5% deposit would be:

£15,000

A 2.5% deposit would be:

£7,500

That is a very different savings target.

For someone with a stable income and good affordability but a relatively small deposit, this could potentially bring home ownership forward considerably.

If you are planning your first purchase, ourfirst-time buyer mortgage guide explains more about the wider mortgage process.

Why could the equity loan make mortgage borrowing easier?

The government equity loan could reduce the amount a buyer needs to borrow from the mortgage lender.

If the buyer puts down 2.5% and the government provides 20%, the mortgage itself could represent around 77.5% of the property’s value.

Generally speaking, a lower loan-to-value mortgage can provide access to a different range of mortgage products than borrowing at 95%, 98% or 100% loan-to-value.

However, the normal mortgage checks will still apply.

The lender will still consider things such as:

• Income
• Monthly commitments
• Credit history
• Affordability
• Employment
• Property type
• The lender’s own criteria

The government equity loan does not automatically mean somebody will qualify for the mortgage.

We have seen schemes like this help buyers before

During the Help to Buy years, we helped many customers purchase their first homes using the equity loan scheme.

For some of those buyers, getting onto the property ladder without that additional support would have been considerably more difficult.

Years later, many of them are still pleased that they were able to purchase when they did.

That is why I think Your First Home deserves a proper look.

It will not be the right answer for everybody.

But creating another route for buyers who are struggling with the deposit hurdle gives people another option to consider.

What are the disadvantages of the Your First Home scheme?

There are also several disadvantages and unanswered questions buyers need to consider.

1. It is currently for England

The government’s announcement describes Your First Home as a scheme for England.

Buyers in Scotland, Wales and Northern Ireland should therefore not assume the scheme will be available to them.

We will need to see whether separate measures are introduced elsewhere in the UK.

2. It is currently for new-build homes

The government says the scheme is expected to apply to first-time buyers purchasing a new-build property from a developer signed up to the scheme.

That means somebody wanting to purchase an existing property would not currently appear to qualify.

If you’re considering this route, it is worth understanding how new-build mortgages work, because lender criteria, mortgage offer periods and property requirements can sometimes differ from ordinary purchases.

There is another factor to consider too.

New-build properties can sometimes be sold at a premium compared with similar existing properties nearby.

For example, if comparable existing properties are selling for £250,000 but a new-build is priced at £300,000, the smaller deposit does not automatically make the new-build the better financial decision.

The purchase price still matters.

3. You need to understand what an equity loan means

This is probably the biggest consideration.

A government equity loan is not necessarily the same as an ordinary fixed loan where you borrow £60,000 and simply repay £60,000 later.

If the repayment structure follows the old Help to Buy model, the amount eventually repaid could move with the value of the property.

But again:

This has not yet been confirmed for Your First Home.

Buyers should wait for the detailed terms before making assumptions about the eventual cost.

4. The interest-free period may not last forever

The government has confirmed that the equity loan will have an initial interest-free period.

It has not yet confirmed how long that period will last or what interest or other charges could apply afterwards.

That could have an important impact on the long-term cost of the scheme.

5. Not every property will qualify

The government has already said that developers will need to participate in the scheme.

There will also be:

• A household income cap
• Local property price caps
• Further eligibility criteria

The exact limits are expected to be announced at the Budget.

6. Mortgage lender participation will matter

You will still need a mortgage for the remaining purchase price.

We do not yet know which mortgage lenders will support Your First Home or what their individual lending criteria will be.

That matters because lender participation and criteria can vary significantly with government-backed home ownership schemes.

Your First Home is not the only low-deposit option

This is probably the most important point for first-time buyers.

Do not assume that because a new government scheme exists, it must automatically be the best option for you.

The mortgage market has changed significantly.

Depending on your individual circumstances, other routes could include:

• 95% mortgages
• 98% mortgages
• Some 100% mortgage options
• Mortgages requiring a relatively small fixed deposit
• Shared Ownership mortgages
• Family-assisted mortgages
• Other specialist first-time buyer products

For buyers specifically looking at a new-build property, Deposit Unlock may also be worth considering.

Mortgage availability and lender criteria can change regularly.

This means somebody with a 2.5% deposit should not immediately assume that taking a 20% government equity loan is their only route onto the property ladder.

There may be another mortgage option available without giving the government an equity share in the property.

Your First Home vs a low-deposit mortgage

This is where getting proper mortgage advice becomes particularly important.

Imagine you have a relatively small deposit.

You might potentially have a choice between:

Option 1: Using Your First Home and taking a government equity loan.

Option 2: Taking a higher loan-to-value mortgage without an equity loan.

With the government scheme, your initial mortgage may be smaller.

But depending on the final rules, you could have an equity loan that needs to be dealt with later.

With a conventional low-deposit mortgage, you may initially borrow more, but there is no government equity stake in your home.

Neither option is automatically better.

You need to compare the overall cost, monthly repayments, future obligations and your own circumstances.

You can also use our mortgage calculators to explore affordability and potential repayments before speaking to an adviser.

So, is Your First Home a good scheme for first-time buyers?

It could be a very useful option.

For somebody who can comfortably afford a mortgage but has struggled to save a large deposit, reducing the deposit requirement to 2.5% could make a significant difference.

We saw something similar with Help to Buy.

Many people who might otherwise have struggled to purchase were able to get onto the property ladder.

But buyers should not look only at the attractive headline:

“Buy with a 2.5% deposit.”

You also need to understand:

• What you are borrowing
• What you will eventually have to repay
• Whether your property qualifies
• Whether your income qualifies
• Which lenders participate
• What mortgage products are available
• The price of the new-build property
• What happens if the property increases in value
• What happens if the property falls in value
• What happens after the interest-free period
• How easy it will be to repay or refinance the equity loan

The devil will be in the detail

Right now, we know the broad structure of Your First Home.

What we don’t have is much of the detail that will ultimately determine whether it is suitable for an individual buyer.

Among the questions we want answered are:

• How long will the interest-free period last?
• How exactly will the equity loan be repaid?
• Is repayment linked to the future value of the property?
• Can the equity loan be repaid in stages?
• What happens if property prices fall?
• What will the household income cap be?
• What will the local property price limits be?
• Which developers will participate?
• Which mortgage lenders will support the scheme?
• How will properties be valued when the loan is repaid?
• Will there be administration or management fees?
• When can first-time buyers actually start applying?

We will update this guide as further information becomes available.

Speak to WIS Mortgages before deciding

The positive thing for first-time buyers today is that there are more routes onto the property ladder than many people realise.

Your First Home could become another important one.

But before choosing it purely because you only need a 2.5% deposit, compare it properly against the other mortgage options available to you.

At WIS Mortgages, we can look at your deposit, income, affordability and circumstances and compare the different routes available.

The aim isn’t simply to find a way for you to buy.

It is to help you understand your options before deciding how you want to buy.

Speak to the WIS Mortgages team if you are planning to purchase your first home and would like us to explore the options available to you.

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We will also be publishing a video explaining the Your First Home scheme, what we know so far and the details buyers should watch for when the full rules are announced.

Frequently Asked Questions About Your First Home

Will I have to repay 20% of the future value of my home?

This has not yet been confirmed.

Under the old Help to Buy Equity Loan model, repayment was linked to the percentage equity originally provided.

For example, if the government provided 20% and the property was later worth £400,000, a 20% repayment would equal £80,000.

However, the government has not yet confirmed whether Your First Home will use the same repayment model.

This is one of the most important details buyers should check when the final rules are published.

What is the Your First Home scheme?

Your First Home is a new government equity loan scheme intended to help eligible first-time buyers in England purchase qualifying new-build homes.

The government says it is expected to support 2.5% deposits alongside government-backed equity loans of up to 20%.

How much deposit will I need for Your First Home?

The government says Your First Home is expected to allow eligible first-time buyers to purchase with a deposit of 2.5%.

Full eligibility requirements have not yet been announced.

How much will the government lend under Your First Home?

The government has announced an equity loan of up to 20% of the property value.

Is the Your First Home government loan interest-free?

The government has said there will be an initial interest-free period.

However, the length of that period and any interest or charges applying afterwards have not yet been confirmed.

Is Your First Home the same as Help to Buy?

No.

It is a new scheme, although there are similarities because both involve government equity support and new-build properties.

The final Your First Home terms still need to be published, so buyers should not assume all of the old Help to Buy rules will apply.

Can I use Your First Home to buy an existing property?

Based on the government’s announcement, the scheme is intended for the purchase of a new-build property from a participating developer.

It therefore does not currently appear to cover normal resale properties.

You can read more about new-build mortgages here.

Is Your First Home available throughout the UK?

The announced Your First Home scheme applies to England.

Buyers in Scotland, Wales and Northern Ireland should not assume that the same scheme will be available to them.

Will every first-time buyer qualify?

No.

The government has already confirmed there will be a household income cap and local property price caps.

The exact limits are expected to be announced at the Budget.

When will the Your First Home scheme start?

The government has not yet announced the final implementation date.

Further information on costs and implementation timelines is expected at the Budget.

Can I get a mortgage with a small deposit without using Your First Home?

Potentially, yes.

There are already low-deposit mortgage options available, including 95%, 98% and, for some qualifying borrowers, 100% loan-to-value mortgages.

There are also alternatives such as Shared Ownership and Deposit Unlock.

Availability and lender criteria change regularly, so it is worth comparing the market rather than assuming the government scheme is your only option.

Is a government equity loan better than a 95% or 98% mortgage?

Not necessarily.

An equity loan could reduce the size of your initial mortgage, but it may also create a separate financial commitment linked to your property.

A traditional high loan-to-value mortgage means borrowing more from the mortgage lender but without a government equity stake.

The right option depends on your deposit, affordability, property, future plans and the final rules of Your First Home.

Can I check how much mortgage I could afford?

Yes.

You can use the WIS mortgage affordability calculator for an initial indication.

A calculator is only a starting point, though, and does not replace personalised mortgage advice.

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Important information: Your First Home has been announced by the government, but the final scheme terms have not yet been published. This article is based on information available as of 28 September 2026 and will need to be updated when further details are announced at the Budget.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Mortgage availability and eligibility are subject to individual circumstances, lender criteria, affordability and property suitability.