The Autumn Budget has confirmed one of the biggest new interventions for first time buyers in several years. The government is putting £4.7 billion into Your First Home, an equity loan scheme designed to help eligible buyers purchase a new build property in England with a deposit of as little as 2.5%.
Applications are expected to open in February 2027, with the first purchases completing from April. Pre-registration is due to begin before the end of December 2026. The government’s updated guidance is here: https://www.gov.uk/government/publications/your-first-home/your-first-home.
For buyers struggling primarily with the deposit hurdle, that could make a substantial difference. But it is not simply a cheaper version of a conventional mortgage, and waiting for the scheme will not make sense for everyone.
How Your First Home will work
An eligible buyer will contribute a deposit of at least 2.5% of the purchase price. The government will then provide an equity loan equal to 20%, with the remainder funded through a repayment mortgage from a participating lender.
For a £300,000 property, the government illustrates this as a £7,500 deposit, a £60,000 equity loan and a £232,500 mortgage. By comparison, a conventional 95% mortgage would typically require a £15,000 deposit and £285,000 mortgage.
The scheme is expected to support around 70,000 first time buyers. The Budget also confirmed that deposits will be capped at 15%, with annual funding limits applying to the scheme. Full Budget details are here: https://www.gov.uk/government/publications/budget-2026-document/budget-2026-html.
Who will be eligible?
Your First Home is specifically designed for first time buyers purchasing an eligible new build property in England from a developer taking part in the scheme.
Buyers will normally need to use the property as their main home and have household income of no more than £110,000 outside London or £140,000 within London. They must also be able to pass the participating lender’s normal affordability and credit checks.
Property price caps vary by local authority. The government has now published the full list, with caps ranging according to local market conditions. Inner London areas can have a maximum of £650,000, while the outer London cap is generally £500,000.
That restriction is important. This is not a scheme that can be used to buy any first home on the open market.
The equity loan is not free money
The government equity loan is interest free for the first five years. In year six, interest is currently planned at 1.5%, rising to 3% from year seven. Those interest payments are separate from the mortgage and do not reduce the balance of the equity loan itself.
More importantly, the amount ultimately owed is linked to the property’s value.
If the government initially funds 20% of the purchase price, the borrower will normally repay 20% of the property’s value when the loan is repaid. If the home rises in value, the amount owed increases too. If its value falls, the amount repaid can fall.
Borrowers can repay some or all of the loan before selling, although the government says further details about minimum repayments, valuations and fees will be published before applications open.
Could the scheme make monthly payments easier?
Potentially. Because the government equity loan reduces the size of the mortgage required, monthly mortgage repayments could be lower than with a conventional 95% mortgage.
The government’s illustrative £300,000 example assumes a 5% mortgage rate and produces a mortgage payment of around £1,248 a month under Your First Home, compared with £1,530 on a standard 95% mortgage. These are illustrations rather than current mortgage quotes, and actual rates will depend on the participating lender and the borrower’s circumstances.
That distinction matters particularly now. The Bank of England raised Bank Rate from 3.75% to 4% on 5 November, after inflation reached 3.5%. Mortgage pricing could therefore continue to move before Your First Home applications open next year. The Bank’s latest decision is here: https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2026/november-2026.
Should first time buyers wait for it?
That depends on what is preventing you from buying.
If the biggest obstacle is raising a conventional deposit, you want a new build property, and you are likely to meet the scheme’s income and price limits, waiting until applications open could be worth considering.
But buyers who already have an adequate deposit should not automatically put a suitable purchase on hold. Your First Home restricts the properties and developers you can use, annual funding is limited, and full application terms have not yet been published.
There is also no guarantee that mortgage rates or house prices will be more favourable by spring 2027.
The most important factor remains finding a suitable home that you can comfortably afford. A government scheme can improve the numbers, but it should not become the sole reason for buying a particular property or waiting for one.
Practical takeaways
First time buyers interested in Your First Home should check their local property price cap, consider whether they specifically want a new build and watch for pre-registration before the end of December.
It is also worth comparing the scheme with a conventional mortgage rather than assuming the smaller deposit automatically makes it cheaper overall. The equity loan, future interest charges and government share of future property value all matter.
If you are hoping to buy in 2027, Altura Mortgage Finance can help you understand how Your First Home could compare with the wider mortgage options available to you and whether waiting for the scheme fits your circumstances.
Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Think carefully before securing other debts against your home. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. Altura Mortgage Finance Limited is authorised and regulated by the Financial Conduct Authority. Firm Registration No: 827849 www.fsa.gov.uk/register/home.
