Earlier this month, we looked at whether the government’s proposed ‘Your First Home’ scheme could provide a meaningful boost for first-time buyers and developers. At the time, much of the detail was still to come.
The autumn budget 2026 has now filled in many of those gaps and placed Your First Home alongside wider measures aimed at helping first-time buyers onto the property ladder, including a new First Time Buyer ISA. With £4.7 billion of funding confirmed for Your First Home and further detail on eligibility, equity loan terms, developer contributions and the timetable for launch, we now have a much clearer picture of how the scheme will work and who will benefit.
So, has the budget turned an ambitious proposal into a workable scheme for buyers and housebuilders?
The basic structure remains as previously announced. Eligible first-time buyers in England will be able to purchase a qualifying new-build home using a deposit of at least 2.5% of the purchase price, a repayment mortgage from a participating lender and a government equity loan worth 20% of the purchase price.
The government has committed £4.7 billion over five years to the scheme, with £700 million allocated in 2027/28 and £1 billion in each of the subsequent years.
Buyers will normally need to have a total annual household income of £110,000 or less outside London or £140,000 or less within London, and the property must be within the relevant local price cap. The full eligibility rules will be published before applications open.
Property price caps will vary depending on location, with separate caps for inner and outer London. The government has provided some examples, but the full list of caps by local authority is still to be published.
The government equity loan will be interest-free for the first five years. Interest will then be charged at 1.5% in year six and 3% from year seven. These interest payments are separate from the mortgage and will not reduce the amount owed under the equity loan.
Importantly, this is an equity loan. The amount that ultimately needs to be repaid is linked to the value of the home.
For example, if the equity loan represents 20% of the purchase price, the buyer will normally repay 20% of the property's value when the loan is repaid, based on an independent valuation. This means the amount repayable could increase or decrease as the property's value changes.
The equity loan will normally be repaid when the property is sold, although buyers will also be able to repay some or all of it earlier. Further guidance is still awaited on minimum repayment amounts, valuation requirements, any applicable fees and how repayment will work when selling or remortgaging.
For buyers, therefore, the attraction of a 2.5% deposit needs to be considered alongside mortgage affordability and the longer-term cost and implications of the equity loan.
Developers of all sizes will be able to participate, subject to meeting the scheme requirements, and will need to enter into a participation agreement. Developer participation fees, calculated by reference to the final sale price of properties sold using the scheme, will contribute towards the scheme's running costs.
The fees will apply progressively being 1% on the first 100 homes sold through the scheme each year, 3% on homes 101 to 250 and 4% on homes above 250.
The government says this progressive structure is intended to help make the scheme accessible to small and medium-sized developers. By way of illustration, a developer selling 500 homes through the scheme would pay an average contribution of 3.1%.
This gives developers an important part of the commercial picture that was missing when the scheme was first announced. They can now start to weigh the potential benefit of access to first-time buyers using the scheme against the cost of participation.
Your First Home forms part of a wider package of budget measures aimed at helping first-time buyers.
The government has also confirmed a new First Time Buyer ISA, which will replace the Lifetime ISA for new savers from April 2029. Savers will be able to contribute up to £4,000 a year, with a 25% government bonus available towards the purchase of a qualifying first home worth up to £450,000. Unlike the Lifetime ISA, the new product will have no upper age restriction.
There is also an immediate change for existing Lifetime ISA holders. From 29 October 2026, funds can be withdrawn to purchase a property above the £450,000 property price cap, where the other qualifying conditions are met, with a reduced withdrawal charge of 20%. The change is intended to ensure that savers do not lose their original contributions where the property exceeds the cap.
The two measures therefore address different parts of the journey into home ownership: the First Time Buyer ISA supports saving for a deposit, while Your First Home is designed to reduce the mortgage requirement when purchasing an eligible new-build home.
There is now considerably more substance behind Your First Home than when we first considered the proposals.
For buyers, the combination of a 2.5% deposit and a 20% equity loan could significantly reduce the amount they need to borrow through a conventional repayment mortgage. The government's own illustration of a £300,000 purchase comprises a £7,500 deposit, a £60,000 government equity loan and a £232,500 repayment mortgage.
For developers, restricting the scheme to eligible new-build homes from participating developers may provide access to an additional pool of first-time buyers. However, participation comes at a cost and the commercial benefit for individual developers will depend on factors such as the number and price of qualifying properties and the level of demand for homes through the scheme.
There are also still details to come. The full eligibility rules and local property price caps have not yet been published, together with further information about participating developers and lenders and the detailed terms and conditions of the scheme.
The timetable for implementation is relatively quick.
By the end of December 2026, the government expects customer pre-registration and the first developer registrations to take place. The scheme is then expected to open for customer applications in February 2027, with the first property sales under the scheme expected from April 2027.
For developers, the next step will be to consider whether participation fits with their sales strategy and to assess the commercial implications as the remaining guidance and scheme documentation become available.
For first-time buyers, the budget provides a much clearer picture of the support available. The reduced deposit offered through Your First Home may make home ownership more accessible for some, while the new First Time Buyer ISA provides a longer-term route to help future purchasers build their deposit. Mortgage affordability and the longer-term implications of an equity loan will, however, remain important considerations.
Our residential development team can advise developers on the implications of Your First Home for development and plot sales. For more information, please contact our real estate team.
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