Your First Home Scheme: 2.5% Deposit and 20% Equity Loan Explained

The government has announced a new first-time buyer scheme called Your First Home, which would let eligible buyers purchase a new build home in England with a deposit of just 2.5%, backed by a government equity loan of up to 20% of the property's value. Nothing is confirmed yet: full details, including eligibility rules and price caps, are due to be set out at the Autumn Budget.

Key takeaway: Your First Home has been announced, not launched. The headline figures (2.5% deposit, 20% equity loan, new builds only) come from the government's own announcement, but the detailed rules have not been published and could change before the scheme opens.

[[stats: 2.5% = Minimum deposit, as announced | 20% = Government-backed equity loan | New build = Eligible homes from participating developers]]

What is the Your First Home scheme?

Your First Home was announced by Prime Minister Andy Burnham on 26 September 2026 at the Labour Party conference, with a supporting press release from the Ministry of Housing, Communities and Local Government. It is aimed at first-time buyers who are struggling to save a large deposit, particularly those without help from family.

According to the government's announcement, the scheme would work in three parts:

• A 2.5% deposit from you, the buyer.
• A government-backed equity loan of up to 20% of the property's value, with an initial interest-free period.
• A standard mortgage from a lender to cover the rest, which on these figures would be around 77.5% of the purchase price.

The scheme is limited to new build homes from developers who sign up to it, and developers will be expected to contribute towards its costs. The government has also said there will be a household income cap and local property price caps, so that support is targeted at the buyers who need it most.

Good to know: At the time of writing, the government has said full details, costs and timelines will be published at the Autumn Budget. Some reports have mentioned a five-year interest-free period, a £600,000 cap and specific repayment terms, but these have not been confirmed in the official announcement. Treat any figure beyond the 2.5% deposit and 20% equity loan as provisional until then.

How would a 2.5% deposit and 20% equity loan work in practice?

An equity loan is different from a normal loan. Rather than borrowing a fixed sum you pay back monthly, the government lends you a percentage of the home's value, and you usually repay that same percentage of the home's value when you sell or pay it off. That means if your home goes up in value, the amount you repay goes up too.

Example: On a £250,000 new build, a 2.5% deposit would be £6,250 and a 20% equity loan would be £50,000, leaving a mortgage of £193,750 (77.5% loan to value). Compare that with a standard 95% mortgage on the same home, which would need a £12,500 deposit and a mortgage of £237,500. Because the mortgage sits at a lower loan to value, lenders may also offer better rates, although that depends on how lenders price these products once the scheme launches. This is an illustration only, based on the figures announced so far.

The government's own announcement says buyers could save hundreds of pounds a month compared with a 95% mortgage. Whether that applies to you would depend on the property, the mortgage rate available and the final terms of the equity loan, including what happens once any interest-free period ends.

Is Your First Home the same as Help to Buy?

Not exactly, but it is clearly built on a similar model. The Help to Buy equity loan scheme ran in England from 2013 until 2023 and also offered new build buyers an equity loan of up to 20% (40% in London). The biggest headline difference is the deposit: Help to Buy required 5%, while Your First Home has been announced at 2.5%.

[[table: | Your First Home (as announced) | Help to Buy equity loan (closed) ;; Minimum deposit | 2.5% | 5% ;; Equity loan | Up to 20% | Up to 20% (40% in London) ;; Property type | New build from participating developers | New build from registered developers ;; Buyer type | First-time buyers | First-time buyers (from 2021) ;; Income and price caps | Household income cap and local price caps planned, details to follow | Regional price caps ;; Interest | Initial interest-free period, length to be confirmed | Interest-free for 5 years, then interest charged ;; Status | Announced, due to be confirmed at the Budget | Closed to new applications]]

Help to Buy's experience is worth knowing about. Once its interest-free period ended, borrowers started paying interest on the loan, which rose each year. Many people chose to remortgage and repay the equity loan to avoid those costs. It remains to be seen whether Your First Home will follow the same pattern.

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Who could be eligible for Your First Home?

Based on the government's announcement, you would need to be a first-time buyer purchasing a new build home in England from a developer taking part in the scheme. Beyond that, the key eligibility rules have not yet been published, including:

• The household income cap and how it will be assessed.
• The local property price caps in different parts of England, including East Sussex.
• How long the interest-free period will last and what the charges will be afterwards.
• When the equity loan has to be repaid.
• Which lenders will offer mortgages alongside the scheme.

You would also still need to pass a lender's normal affordability and credit checks for the mortgage part of the purchase. Our guide to new build mortgages for first-time buyers explains how lenders typically approach new build homes, including developer incentives and warranties.

When will Your First Home launch?

There is no confirmed launch date yet. The government has said the scheme will be confirmed, with full details, at the Autumn Budget in October 2026, and reports suggest pre-registration could open by the end of 2026. Until the details are published, it is not possible to reserve a home or apply under the scheme.

What can first-time buyers do in the meantime?

If you are hoping to use Your First Home, there are sensible steps you can take now without committing to anything:

• Keep saving. Even with a 2.5% deposit, you will still need money for legal fees, surveys and moving costs. A Lifetime ISA could help, as the government adds a 25% bonus on savings of up to £4,000 a year towards a first home worth £450,000 or less.
• Check your credit file so any issues can be tidied up before you apply.
• Understand your borrowing power. Knowing roughly how much a lender may offer helps you see which new build homes could be realistic. Our borrowing calculator gives a general idea.
• Look at existing options. You do not have to wait. Many lenders already offer 5% deposit mortgages, and some offer 0% deposit options, subject to eligibility. Our guide to low deposit mortgages covers what is available now.

A mortgage broker at Quanstrom Financial can help you weigh up whether waiting for Your First Home makes sense for you, or whether an existing scheme could get you moving sooner. For the bigger picture on buying your first home, see our complete first-time buyer guide.

Frequently asked questions

Has the Your First Home scheme been confirmed?

Not yet. The scheme was announced on 26 September 2026, and the government has said it will be confirmed, with full details, at the Autumn Budget in October 2026. The rules could change before it launches.

Can I use Your First Home to buy an older or second-hand property?

Based on the announcement, no. The scheme is limited to new build homes from developers who have signed up to take part. If you are looking at older properties, other low deposit mortgage options may be worth exploring instead.

Do I have to pay interest on the equity loan?

The government has said there will be an initial interest-free period, but the length of that period and any charges afterwards have not yet been officially confirmed. These details are expected at the Budget.

How do you repay a government equity loan?

With an equity loan, you usually repay a percentage of your home's value rather than the original amount borrowed, typically when you sell, remortgage or reach the end of the loan term. The exact repayment rules for Your First Home have not yet been published.

Is Your First Home available outside England?

The scheme has been announced for England. Scotland, Wales and Northern Ireland run their own housing policies, so buyers there would need to check what is available locally.

Is there a property price cap?

The government has said there will be local property price caps and a household income cap, but the actual figures have not yet been confirmed. These are expected to be set out at the Budget.

Should I wait for Your First Home or buy now?

That depends on your circumstances, including your savings, the type of home you want and how soon you want to move. Waiting could mean a smaller deposit on a new build, but existing low deposit mortgages are available now. Speaking to an adviser can help you compare both routes.

Written by Toby Quanstrom CeMAP, Director at Quanstrom Financial, a whole-of-market mortgage broker based in Eastbourne, East Sussex.

This article is for general information only and is based on the government's announcement of 26 September 2026. The scheme has not been confirmed and full details are due to be published at the Autumn Budget. Nothing in this article is financial advice.

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