Your First Home Scheme: what we know so far
Last updated: 6th November
The Government has announced a new scheme to help first-time buyers in England onto the property ladder. It isn’t open yet, and some important details are still to be confirmed — but enough has been published to be worth understanding now, particularly if you’re saving towards a first home.
We’ll keep this page updated as the detail emerges.
What’s been confirmed
| Minimum deposit | 2.5% from the buyer |
| Government equity loan | 20% of the purchase price |
| Property type | New-build only — resale homes won’t qualify |
| Where it applies | England only. Scotland, Wales and Northern Ireland are running their own arrangements |
| Status | Announced, not yet open |
What we don’t know yet
This is the honest part, and it matters. The following haven’t been confirmed:
- When it opens. No launch date has been published.
- Who’s eligible. Further eligibility criteria are still to come. It’s reasonable to expect income limits and first-time-buyer conditions, but nothing has been confirmed.
- Property price caps. Previous schemes of this type applied regional limits on the value of the property. Whether this one does, and at what level, is unknown.
- The terms of the equity loan. Whether interest is charged, when it starts, and how and when the loan is repaid have not been set out.
- Which lenders will take part. Schemes like this depend on lenders building products around them, which usually takes time after launch.
How an equity loan works
This is the part most worth understanding before the detail arrives, because it’s where people most often misunderstand schemes of this kind.
An equity loan isn’t a loan of a fixed sum. The Government takes a share of your property — in this case 20% — and when you come to repay it, you repay 20% of what the property is worth at that point, not 20% of what you originally paid.
If your home rises in value, the amount you owe rises with it. If it falls, the amount you owe falls too.
To put rough numbers on it: on a £200,000 new-build, a 20% equity loan would be £40,000. If the property were later worth £250,000, that same 20% share would be £50,000. You’d have gained from the increase in value overall, but the repayment is larger than the sum originally advanced.
Under the previous Help to Buy equity loan scheme, interest also became payable after an initial period. Whether Your First Home Scheme works the same way hasn’t been confirmed.
Illustrative example only. Actual figures will depend on the final scheme terms and your own circumstances.
How it compares to Help to Buy
The structure will look familiar to anyone who remembers Help to Buy: a small deposit from the buyer, a government equity loan, new-build properties only.
The headline difference is the deposit. Help to Buy required a minimum of 5% from the buyer; this scheme sets the minimum at 2.5%. For people who’ve found saving a deposit the single hardest part of buying, that’s a meaningful change.
What we can’t yet say is whether the rest of the terms — the interest, the repayment rules, the price caps — follow the same pattern.
Nicola Bentman, Director and Mortgage & Protection Adviser at Choice Mortgages:
“We advised a lot of buyers through Help to Buy, and the thing people most often hadn’t grasped was that the equity loan is a share of the property rather than a fixed amount. If your home goes up in value, so does what you owe back. That’s not a reason to avoid these schemes — they helped a great many people onto the ladder who couldn’t otherwise have managed it — but it’s worth going in with your eyes open.”
Things worth thinking about
If you’re considering this once it opens, these are the questions we’d want to talk through with you:
- New-build only. That narrows your search considerably, and new-build pricing works differently from the resale market. It’s worth understanding what you’re buying.
- The smaller your deposit, the higher your borrowing. A 2.5% deposit means a larger mortgage than a 10% deposit would, and the rates available at higher loan-to-values are usually less competitive.
- Selling later. Equity loans add a step when you come to sell or remortgage. It’s manageable — we’ve guided plenty of people through it — but it’s worth knowing in advance.
- It may not be your best option. Depending on your circumstances there may be other routes, including lenders offering higher borrowing to first-time buyers without an equity loan attached. Worth comparing rather than assuming.
What happens next
The scheme isn’t open, so there’s nothing to apply for yet. The sensible thing to do in the meantime is to get a clear picture of what you could borrow and what you’d be comfortable repaying, so you’re ready to move when it launches.
We’ll update this page as the criteria are published.
If you’re saving for a first home and want to talk it through — this scheme or anything else — we’re always happy to have a conversation. There’s no charge for an initial chat and no obligation afterwards.
Published
This article is for general information only and is not personal advice. Your home may be repossessed if you do not keep up repayments on your mortgage. Choice Mortgages UK Limited is authorised and regulated by the Financial Conduct Authority (FRN 300688).