In September, the UK Government announced the creation of a brand-new scheme to help eligible first-time buyers in England get onto the property ladder with a 2.5% deposit and a 20% equity loan from the Government.
The scheme isn’t available just yet, but full details will be released in the Government’s Autumn Budget on 28th October.
In the meantime, this guide will explain what we know about the scheme, as well as the help already available for first time buyers.
Key takeaways
- A new government scheme is set to launch for first-time buyers
- Smaller deposit required of 2.5%, alongside a government-backed equity loan of 20%
- For eligible buyers purchasing new-build homes (from participating homebuilders)
- All the details on who will be eligible will be announced within the Autumn Budget on 28th October
What is the Your First Home scheme?
The Your First Home scheme is a new UK Government backed initiative designed to help eligible first-time buyers in England purchase a home with a smaller deposit.
Announced in September 2026, the scheme is expected to combine a 2.5% deposit with a government-backed equity loan of 20%, helping buyers who might otherwise struggle to traditionally save enough to get onto the property ladder.
How will the Your First Home scheme work?
The Your First Home scheme will help buyers fund a new-build property through three components: their own deposit, a government-backed equity loan and a standard mortgage.
Buyers will contribute a deposit of 2.5% of the property's purchase price, with the Government providing an equity loan of 20%. At the moment we expect a mortgage would cover the remaining 77.5%, but of course this will be confirmed subject to the lender's affordability assessment and the scheme's final rules.
For example, on a property costing £250,000, the proposed breakdown would be:
- Your deposit (2.5%): £6,250
- Government equity loan (20%): £50,000
- Mortgage (77.5%): £193,750
This example illustrates the announced funding structure, rather than a confirmed offer for a particular property or buyer.
What is an equity loan?
An equity loan is money you borrow to help buy your home, alongside your deposit and mortgage. It isn’t free money, you’ll need to pay it back.
Unlike a standard loan, it is linked to a percentage of your home’s value, rather than just the amount you originally borrowed. This means the amount you repay could go up or down if your home’s value changes.
A simple example
Using the £250,000 home in the example above, a £50,000 equity loan would cover 20% of its purchase price. If you still owed the full 20% when you repaid it:
- If your home’s value rose to £300,000, 20% would be £60,000 — £10,000 more than you originally borrowed.
- If your home’s value stayed at £250,000, 20% would be £50,000 — the same amount you originally borrowed.
- If your home’s value fell to £200,000, 20% would be £40,000 — £10,000 less than you originally borrowed.
This is an illustration of how a percentage-based equity loan works, not confirmed repayment terms for Your First Home. The final rules still need to be confirmed, including when you would repay the loan and any interest or fees. The figures above exclude any interest or fees and are separate from your mortgage repayments.
Who is eligible for the Your First Home scheme?
The Your First Home scheme is aimed at eligible first time buyers purchasing new-build properties in England. The Government has announced that household income limits and local property price caps will likely apply, with the intention of directing support towards buyers who need it most.
Until the Budget, we won’t know the final eligibility rules, however prospective buyers should look out for confirmation of:
- First-time buyer status: The rules determining whether an applicant qualifies as a first-time buyer.
- Household income limits: The maximum income permitted for an individual or household.
- Property price caps: The maximum eligible purchase price, including any differences between locations.
- Property requirements: Whether the property must be a new-build home purchased from a participating developer.
- Mortgage affordability: The lender's requirements for assessing income, expenditure, credit history and borrowing capacity.
- Other eligibility conditions: Any additional restrictions or requirements set out in the final guidance.
When will the scheme launch, and how do you apply?
This is very much still under wraps, but it is expected that we will find out the launch during the Budget on Wednesday 28th October 2026 at 12.30pm. There will likely be a pre-registration period and then an official launch date where first-time buyers can apply.
What are the benefits?
The Your First Home scheme can offer a useful route onto the property ladder for eligible first-time buyers who have a reliable income but need support saving.
Benefits include:
A lower deposit requirement
The proposed 2.5% deposit could reduce the amount buyers need to save before purchasing a home. For people who can afford monthly repayments but struggle to build a large deposit, this could make homeownership more accessible.
A potentially smaller mortgage
With the Government contributing 20% of the purchase price through an equity loan, buyers would need a mortgage covering a smaller proportion of the property price than they would without that support. This can improve affordability for some applicants, although mortgage approval is never guaranteed.
A clearer route to homeownership
For eligible buyers who have been saving for years, the scheme could provide another option to consider alongside conventional mortgages and other first-time buyer support.
What buyers should do next
If you’re hoping to get onto the property ladder, now is a good time to talk to an independent financial advisor – the sales team on any of our developments can put you in touch for free, independent advice.
Want to move soon?
If you want to make your move now and don’t want to wait on the new scheme, Cala is already supporting many first-time buyers with a range of tailored incentives to help get you moving including deposit contributions.
Visit our First-time buyer webpage for more information.
