Last updated: 16 October 2026. We will update this guide once full details are confirmed at the Autumn Budget on 28 October 2026.
Quick answer: The Your First Home scheme is a new government equity loan scheme for first time buyers in England. It is expected to let you buy a new build home with a 2.5% deposit, a 20% government equity loan and a mortgage covering the remaining 77.5%. The scheme has been announced but is not open to applications yet.
Saving for a deposit is often the hardest part of buying your first home. Rents are high, living costs keep rising and even a 5% deposit can feel years away. So it is no surprise that the new 2.5% deposit scheme has caught the attention of so many first time buyers.
This guide explains what the Your First Home scheme is, who it is likely to help, the costs to weigh up and what you can do now to get ready. It is based on what the government has announced so far. It is general information rather than personal advice, and the team at KingsGate Finance can help you apply it to your own situation.
What Is the “Your First Home Scheme”?
The Your First Home scheme is a government backed equity loan scheme that aims to help first time buyers in England buy a new build home with a much smaller deposit. The government announced it on 26 September 2026 and the official gov.uk announcement confirms that full details will be set out at the Budget.
Here is how the numbers could work on a £250,000 new build home:
| Part of the purchase | Share | Amount |
|---|---|---|
| Your deposit | 2.5% | £6,250 |
| Government equity loan | 20% | £50,000 |
| Your mortgage | 77.5% | £193,750 |
An equity loan works differently from a normal loan. Under the old Help to Buy equity loan, which is no longer open to new applications, you repaid the same share of your home’s value when you sold. So if you borrowed 20% and your home went up in value, you repaid 20% of the higher value. The exact repayment rules for the Your First Home scheme will be confirmed at the Budget.
Who Could Be Eligible for the 2.5% Deposit Scheme?
Based on the announcement, you are likely to need to meet all of the following conditions:
- You are a first time buyer.
- You are buying in England.
- You are buying a new build home from a developer that has signed up to the scheme.
- Your household income and the property price fall within the scheme’s caps.
The government has said there will be a household income cap and local property price caps, but it has not published the figures yet. These will be set out at the Budget. The scheme has been announced for England, so buyers in Scotland, Wales and Northern Ireland should not expect to use it.
What Are the Benefits and the Catches?
The biggest benefit is time. Needing only 2.5% rather than 5% or 10% could bring your move forward by months or even years.
Your mortgage would also cover 77.5% of the value rather than 95%. The government says buyers could save hundreds of pounds a month compared with a 95% mortgage, although your own savings will depend on your circumstances and the rates available at the time.
There are catches to weigh up, though. The equity loan must be repaid and if it works like Help to Buy, you could repay more than you borrowed when your home rises in value. The loan is expected to be interest free only for an initial period, so you need to plan for the cost once that period ends. You are also limited to new build homes from developers that have signed up to the scheme.
These trade offs are why independent mortgage advice matters. An adviser can compare the scheme with other routes, such as a standard 95% mortgage or saving a little longer.
What Is Still Unconfirmed Until the Autumn Budget?
Several important details will not be known until the Autumn Budget on 28 October 2026. These include:
- how long the interest free period will last
- what interest or fees apply after that
- how and when the equity loan must be repaid
- the exact income caps and property price caps
- which developers and lenders will take part
- when you can register and apply
Until these details are published, be cautious about paying a reservation fee on a new build home on the assumption that the scheme will cover you. If the final rules do not fit your circumstances, you could lose money or be left without the funding you planned on.
How Can You Get Ready Before the Scheme Opens?
You do not need to wait for the Budget to start preparing. A few practical steps now could put you in a stronger position.
Start by checking your credit file with the main credit reference agencies and correcting any errors. Lenders will still assess your income, spending and credit history, even with a government equity loan.
Next, build your savings beyond the 2.5% minimum. You will also need money for legal fees, surveys, moving costs and possibly stamp duty. Our guide to the hidden costs of buying a home explains these, and you can check the current stamp duty rules on gov.uk.
Then gather your documents, including payslips, bank statements and proof of ID. Finally, think about how you would keep up repayments if illness or injury stopped you working. Income protection is worth considering alongside any new mortgage.
Is the 2.5% Deposit Scheme Right for You?
The Your First Home scheme could be a real opportunity for first time buyers who earn enough to afford a mortgage but have struggled to save a large deposit. It is not right for everyone, however. The equity loan, the new build only rule and the details still to be confirmed all need careful thought.
The best thing you can do now is prepare, stay informed and avoid committing to a property until the final rules are clear. We will update this guide after the Budget so that you have the latest information in one place.
Everyone’s route to their first home is different and a scheme that suits one buyer may not suit another. KingsGate Finance is based in Aldershot, Hampshire, and helps clients all over the UK with personalised, independent mortgage advice, online or by phone. If you would like to talk through whether the Your First Home scheme is right for you, speak to one of our advisers for a friendly conversation with no obligation.
Frequently Asked Questions
Can I use the Your First Home scheme to buy an older home?
No. Based on what has been announced, the Your First Home scheme only covers new build homes from developers that have signed up to it. Older and resale homes are not expected to qualify.
Do I have to pay back the 20% equity loan?
Yes. The Your First Home equity loan is a loan, not a gift, so it must be repaid. The exact repayment rules will be confirmed at the Autumn Budget on 28 October 2026.
Can I still get a mortgage under the scheme if my credit history is not perfect?
Possibly. Lenders will still check your credit history and affordability, so a poor record could limit your options. A qualified adviser can help you find lenders that suit your situation.
Is the Your First Home scheme available in Scotland, Wales or Northern Ireland?
No. The government has announced the Your First Home scheme for England only. Buyers elsewhere in the UK should check what support is available where they live.
What happens to the equity loan if I want to move or remortgage later?
The full rules have not been published yet. Under the old Help to Buy scheme, you had to repay the equity loan when you sold, and remortgaging involved extra steps and administration fees. The Your First Home rules may differ, so take advice before you make any changes.