The UK government has introduced Your First Home, a £4.7bn initiative designed to assist 70,000 first-time buyers in England in purchasing new-build residential properties. The scheme was announced earlier this month by Andy Burnham and detailed in the chancellor’s budget announcement.
The program offers government-backed equity loans equal to 20% of a property’s purchase price, which remain interest-free for the first five years. Buyers are required to provide only a 2.5% deposit, with standard mortgages covering the remaining 77.5% of the property value. According to government estimates, this structure could reduce monthly payments by hundreds of pounds compared to conventional 95% mortgages. Following the interest-free period, borrowers will pay 1.5% interest in year six, increasing to 3% from year seven onward.
Eligibility is restricted to first-time buyers meeting specific income thresholds: £110,000 annually outside London and £140,000 within London. Property price caps vary by location, with inner London capped at £650,000 and outer London at £500,000. Other example caps include Manchester at £355,000, Reading at £375,000, and Middlesbrough at £220,000. Complete local authority price caps will be published in the coming weeks.
The equity loan is linked to property value, meaning repayment amounts adjust if home values fluctuate. Borrowers own their homes outright and can repay the equity loan when selling or earlier if desired. Customer pre-registration opens by end of December, with applications beginning in February 2027 and first loans disbursed from April next year.
Your First Home replaces the previous Help to Buy scheme, which concluded in 2023. While the new program is less generous in London regarding equity loan percentages, it requires lower deposits than its predecessor.
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