A proposed government scheme could make it easier for first-time buyers in England to purchase a new-build home with a much smaller deposit.


The government has announced plans for a new equity loan scheme called Your First Home, aimed at buyers who can afford monthly mortgage payments but are struggling to save a substantial deposit.

Under the proposed scheme, eligible first-time buyers would need a deposit of just 2.5% of the property’s value. The government would then provide an equity loan of up to 20%, reducing the size of the mortgage required.

How does the scheme work?

The main features announced so far are:

  • The scheme would be available to first-time buyers in England
  • Buyers would need a minimum 2.5% deposit
  • The government would provide an equity loan worth up to 20% of the property
  • It would only apply to new-build homes purchased from participating developers
  • The equity loan would have an initial interest-free period
  • Household income limits and local property price caps would apply
  • Developers joining the scheme would contribute towards its running costs

For example, someone purchasing a £300,000 home could need a deposit of £7500. A 20% equity loan would provide £60,000, leaving the buyer to arrange a mortgage for the remaining £232,500.

As this is an equity loan, buyers should carefully consider its long-term cost and repayment terms once the full details are available.

When will the scheme begin?

Your First Home has not yet formally launched. The government has confirmed that it will announce further details, including eligibility rules, costs, and implementation, in the Budget on 28 October 2026. An official start date has not yet been confirmed.

Important details are still awaited, including:

  • The household income limit
  • Regional property price caps
  • How long the interest-free period will last
  • The interest charges that will apply afterwards
  • How and when the equity loan must be repaid
  • Whether any age restrictions will apply

Although a small number of lenders already offer mortgages with deposits of 2.5% or less, these tend to come with strict eligibility and property criteria. This new scheme could work differently. The government’s 20% equity loan would mean buyers would only need a mortgage for 77.5% of the property’s value. However, they would need to consider the future cost and repayment terms of the equity loan as well as their mortgage.

How helpful will the scheme be?

So will the scheme genuinely help first-time buyers? Les Pick, MB Associates' Sales & Operations Director, says: ‘We cautiously welcome the Government’s Your First Home scheme. Anything that helps first-time buyers overcome one of the biggest barriers to homeownership – raising a deposit – has the potential to be positive, but the details will be crucial. 

Les adds: ‘A 2.5% deposit combined with a government-backed equity loan could open the door to buyers who might otherwise struggle, but we need to understand the longer-term implications. Mortgage lenders already offer very high loan-to-value products that go above and beyond 97.5%, subject to terms and conditions.

‘We will be looking closely at how the equity loan is repaid, the length of any interest-free period, future charges and what impact the scheme could have when borrowers want to remortgage or move home,’ says Les. ‘There is also a risk that increasing buyers’ purchasing power without increasing housing supply could contribute to higher new-build prices, as we saw new-build company values rise after the announcement.’

Affordable property choice

Les is keen to point out that first-time buyers shouldn't risk overstretching their finances. 'In short, helping people buy their first home is a positive ambition, but it must also be affordable, sustainable and without harsh long-term clauses,' he adds. 'We welcome the intention but await the full details.'

We will continue to monitor the situation and explain what the final scheme could mean for first-time buyers. In the meantime, if you're a potential first-time buyer and want to get mortgage-ready, we recommend that you download our free first-time buyer's guide.