Your First Home: buy your first home in England with a 2.5% deposit and a 20% government loan

On Saturday 26 September the Ministry of Housing, Communities and Local Government (MHCLG) announced a new government scheme for first-time buyers in England — Your First Home. The idea: a deposit from 2.5% of the price, topped up by a government-backed equity loan of up to 20%, for a new-build home bought from a developer signed up to the scheme. The scheme will be formally confirmed at the Budget on 28 October, together with the figures and launch timeline.

How will it work?

The scheme is built around an equity loan. The buyer puts down a deposit from 2.5%, the government provides a loan of up to 20% of the price, and a regular mortgage covers the rest. The equity loan will come with an initial interest-free period: MHCLG says that compared with a 95% mortgage, buyers using the scheme could save hundreds of pounds per month.

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It will only apply to new-build properties — and only from developers who have joined the scheme. Developers will be expected to make a contribution when signing up, to help cover the scheme's costs.

Who will qualify?

The scheme targets first-time buyers who cannot save a standard deposit but could afford the monthly payments. There will be two limits: a household income cap and local property price caps — set separately by area, so support goes to those who genuinely need it. The exact figures will be announced at the Budget.

How is it different from Help to Buy?

A similar scheme, Help to Buy: Equity Loan, ran in England until recently, but applications closed some time ago. Under it the government also lent a share of the price (20% in the standard example), no interest was charged for the first 5 years, and from year six the rate was 1.75% of the original loan amount. The interest terms and repayment rules for Your First Home have not been announced yet — all we know is that the initial period will be interest-free.

When will we know the details?

Everything that matters — the income and price caps, the cost of the scheme and the launch date — will come in the Autumn Budget on Wednesday 28 October 2026. We have rounded up what is already confirmed for the Budget in a separate explainer: the Autumn Budget is set for 28 October.

What can you do now?

Until the scheme launches, the usual rules apply: keep saving for a deposit (even 2.5% of a London new-build price is a serious sum), check your credit history and work out what monthly payment you could afford. Mortgage rates follow the Bank of England base rate — see our explainer on where it stands. And be wary of "advisers" promising early access: you cannot apply for Your First Home yet — the scheme does not exist until the Budget confirms it.