On 26th September, Prime Minister Andy Burnham announced a new scheme for first-time buyers called Your First Home. The headline is simple: save a 2.5% deposit, and the government lends you up to 20% of the property's value through an equity loan, initially interest-free. A conventional mortgage covers the rest.
It is an eye-catching offer, but it is also an announcement rather than a live scheme. The full rules are due at the Autumn Budget on Wednesday 28th October. Here is a plain-English look at what has been said, what has not, and how to make sensible plans in the meantime.
How the scheme is meant to work
Based on what has been announced so far, the numbers look like this on a £230,000 home, roughly the national average:
- Your deposit: 2.5%, or £5,750
- Government equity loan: up to 20%, or £46,000
- Your mortgage: the remaining 77.5%, or around £178,250
That means you would need a mortgage at roughly 77.5% loan to value, which is typically a better rate band than a 95% mortgage. If you are not sure how that works, our explainer on loan to value covers the basics.
What we know and what we don't
Confirmed so far:
- The deposit would be 2.5%, half the 5% that applied under the old Help to Buy equity loan.
- The equity loan would be up to 20% of the home's value and initially interest-free.
- The scheme is aimed at first-time buyers, particularly those without family money to lean on.
- It is reported to apply to new-build homes in England.
- Funding is said to come from reprioritised budgets, with housebuilders contributing towards running costs.
Still unclear:
- How long the interest-free period lasts and what you pay afterwards.
- Whether there will be price caps, regional limits or income and savings tests.
- When the scheme opens and how many buyers it will support.
- How repayment works when you sell or remortgage.
Treat any figure you read beyond the headline numbers with caution until the Budget documents are published.
Lessons from Help to Buy
Anyone who remembers Help to Buy will recognise the shape of this. That scheme helped many people get a foot on the ladder, but the government's own evaluation found that around 54% of buyers could have bought without it. Critics worry that a similar scheme could nudge up new-build prices, or boost housebuilder profits more than it creates extra homeowners. Shadow Housing Secretary Katie Lam has called the plan "a colossal admission of failure", while the government says it will make the first rung of the ladder easier to reach.
Our own guide to how Help to Buy worked is a useful reference point for how an equity loan behaves over the years.
Is an equity loan right for you?
A small deposit is only half the picture. Before you get excited, weigh up the following:
- The loan is not free forever: an interest-free start is welcome, but equity loans have historically become more expensive later on. Find out the terms before you commit.
- You repay a share of the value, not the original sum: if the home rises in value, 20% of that higher figure is what you owe. If it falls, you owe less.
- New-build premiums are real: new homes can cost more than similar existing ones, and can lose some of that premium when you resell.
- Your mortgage still has to stack up: lenders will check affordability as usual, and a lower deposit still means higher monthly commitments than a bigger one would.
- Fees and extras: stamp duty, legal costs and moving costs still need cash. Our closing costs guide shows what to budget for.
What to do while you wait for the Budget
- Keep saving: a bigger deposit will help whatever the final rules say, and 2.5% of a purchase price is still a real sum.
- Check your credit file: fix errors and keep your accounts tidy so you are ready to apply.
- Get a mortgage in principle: it shows how much you could borrow today. Our guide to a mortgage in principle explains how.
- Do not rush into a new-build reservation: wait for the published terms before paying any reservation fee on the strength of the announcement.
- Compare it with other routes: shared ownership and existing homes in a softer market may suit you better. Our first-time buyer guide for 2026 walks through the options.
- Watch 28th October: the Budget should settle eligibility, caps and the interest-free period.
What it could mean for the wider market
A cooler housing market, with house prices falling 0.2% in September on one measure, means buyers are already finding more room to negotiate. A scheme that boosts first-time buyer demand for new-builds could support developers, but its effect on existing homes is less certain. If you are selling, our flat-fee sell your home service keeps your costs fixed whatever the market does.
Landlords: keep an eye on this one
More first-time buyers able to buy could mean some tenants leaving the rental sector over time, though most take years to save and the effect is hard to predict. If you want your property let quickly and reliably, our tenant find service and fully managed service are there to help.
The bottom line
Your First Home could lower the barrier for buyers who are short on deposit, but the details will decide whether it is a genuine help or a costly trap. Prepare your finances now, hold off on big commitments, and read the small print once the Budget lands on 28th October.
