Your First Home Scheme Offers 20% Equity Loans to First-Time Buyers From April 2027

Last checked: 7th November 2026

The Government’s new Your First Home scheme is designed to help first-time buyers in England buy a newly built home with a smaller deposit and mortgage. The Government will provide 20% of the purchase price as a loan linked to the value of the home. Buyers will also need a mortgage from a lender taking part in the scheme. This type of government loan is often called an equity loan.

This guide explains how the loan works, who may qualify, what it could mean for monthly costs and when buyers can apply. It also clarifies where the scheme is available.

Your First Home is a new government equity loan scheme

Your First Home is intended to make buying a first home more achievable for people who cannot easily save a large deposit or borrow enough through a standard mortgage alone. It combines three sources of money to pay for an eligible new-build property:

• Your own deposit, which must be at least 2.5% of the purchase price.
• A government equity loan worth 20% of the purchase price.
• A repayment mortgage from a lender taking part in the scheme.

The Government has made £4.7 billion available over five years, with £700 million allocated for 2027 to 2028 and £1 billion in each of the following years. It expects the scheme to support around 70,000 first-time buyer households in England. These are funding plans and estimates, not a guarantee that every eligible buyer will receive a loan.

How the 20% equity loan works

The government loan makes up 20% of the home’s purchase price. You still need a mortgage for the remaining amount after your deposit and the equity loan have been taken into account.

For example, the Government’s guidance uses a £300,000 home to show how the scheme could work:

Without the scheme, a buyer purchasing the same £300,000 home with a standard 95% mortgage would typically need a £15,000 deposit and a £285,000 mortgage. Under Your First Home, the example deposit is £7,500 and the mortgage is smaller because the government loan covers part of the price.

You own the home from the day the purchase completes. The Government is not your landlord and does not become a joint owner of the property. However, the equity loan is linked to the property’s value, so the amount you repay can change if the home’s value rises or falls.

Who may qualify for Your First Home?

The scheme is intended for first-time buyers who need help to buy a new-build home in England. The published guidance says buyers will normally need to meet all of the following conditions:

These are the main conditions published so far. The Government says it will publish the full eligibility rules, terms and conditions before applications open. Buyers should not assume that meeting the income limit alone guarantees approval.

Household income limits are higher in London

The scheme has two household income limits. The higher limit recognises the cost of buying a home in London.

The income test applies to the household, not just one buyer’s salary. The full guidance will set out how household income is assessed and what evidence applicants need to provide.

Only qualifying new-build homes in England are included

Your First Home is not a general discount or loan for any property on the market. It is limited to eligible new-build homes in England sold by developers participating in the scheme. Developers must sign a participation agreement and pay a contribution towards the scheme’s running costs. The fee is payable by the developer and is intended to support the scheme’s running costs. The fee is calculated as a percentage of the final sale price, with the rate depending on how many scheme homes the developer sells each year: 1% on the first 100 sales, 3% on sales 101 to 250, and 4% on sales above 250. Each rate applies only to the sales within that band.

There will be a maximum property price for each area. The Government has set a price cap for each local authority area, with separate limits for inner and outer London. This means the maximum price will vary depending on where the home is located.

A property must fall within the relevant local price cap to qualify. The Government published its Your First Home property price caps by local authority on 3rd November 2026. Check the cap for the area before assuming a particular development or home will be eligible. The scheme will also involve participating developers and lenders, so not every new-build home or mortgage provider will necessarily be included.

The equity loan is interest-free for five years

You will not pay interest on the government equity loan during the first five years. Interest is then introduced in stages:

These interest payments are separate from your mortgage payments. They do not pay off or reduce the equity loan itself. The Government says further information about how the interest will be collected will be published before applications open.

Your actual monthly costs will depend on the purchase price, mortgage rate, mortgage term and your circumstances. The official example on GOV.UK uses a £300,000 home and a 30-year repayment mortgage at 5%. It estimates total monthly mortgage and equity-loan interest costs of £1,248 in years one to five, £1,323 in year six and £1,398 from year seven. These figures are an illustration, not a mortgage offer or a prediction of what an individual buyer will pay. They exclude other costs such as council tax, insurance, service charges and maintenance.

You repay a share of the home’s value, not simply the original loan amount

The equity loan is linked to the value of the property. If the Government provided 20% of the original purchase price, you will normally repay 20% of the home’s value when the loan is repaid. You may need to pay for a professional valuation, which is an estimate of what the home is worth.

This means the amount due can rise or fall with the value of the home. For example, if you bought for £300,000 and received a £60,000 loan:

The Government therefore shares in both increases and decreases in the home’s value. You will normally repay the loan when you sell the home, but the guidance says you can also repay some or all of it earlier. The Government has not yet published the full rules, including the minimum amount you can repay at a time, how the home’s value will be checked and whether any fees will apply.

When pre-registration and applications open

The scheme is being introduced in stages. The Government’s current timetable is:

Signing up in advance does not commit you to buying a home through the scheme. It is intended to give people who are interested more information about whether they may qualify and the maximum property price in their area. Full applications are not open yet. The Government says it will publish the complete rules before applications begin.

What buyers should consider before using the scheme

A smaller deposit and mortgage may make a purchase possible, but the equity loan is still a financial commitment. Before deciding whether to use it, consider the full cost of owning the property, not just the amount needed to complete the purchase.

• Mortgage affordability: the participating lender will still check your income, credit history and ability to afford the mortgage.
• Future interest: the equity loan is interest-free for five years, but charges begin in year six and increase from year seven.
• Repayment amount: because the loan is linked to the home’s value, the amount you repay may be more or less than the original loan.
• Other buying and ownership costs: budget for legal and mortgage fees, surveys and moving costs. You may also have to pay Stamp Duty Land Tax, which is a tax on buying property in England. Once you own the home, allow for council tax, insurance, repairs and any service or estate charges.
• If you sell or change your mortgage: check how the government loan could affect your options if you later sell the home or switch to a different mortgage deal.

The Government advises buyers to consider independent financial and legal advice before committing to a purchase. The final terms and repayment guidance should be checked before making a decision.

Your First Home is different from the First Time Buyer ISA

The names are similar, but these are two separate government schemes.

The First Time Buyer ISA is not the same as the Your First Home equity loan. It is planned for April 2029 and is aimed at helping people save towards a first home. You do not need to wait for that savings scheme to understand or prepare for Your First Home, which is due to start much earlier.

The scheme does not apply to homes in Scotland, Wales or Northern Ireland

Your First Home is an England-only scheme. The official guidance says it applies to eligible new-build properties in England, so first-time buyers purchasing in Scotland, Wales or Northern Ireland cannot use this particular equity loan.

Although this is a UK Government announcement, the scheme itself is limited to England. Housing support in Scotland, Wales and Northern Ireland is separate and is not covered by Your First Home.