Getting onto the property ladder remains one of the biggest financial hurdles for younger people in Britain. The government has now unveiled its answer, a new equity loan scheme called Your First Home. Here is what we know so far, how it is expected to work, and what industry experts are saying.
What is the Your First Home scheme?
The government is launching a new scheme to make getting on the housing ladder affordable for people able to save a small deposit, Prime Minister Andy Burnham confirmed. It was announced on 26 September 2026 and lets buyers purchase a new-build home with a 2.5% deposit, backed by a 20% government equity loan. The announcement came as Burnham arrived in Liverpool ahead of his first Labour Party conference since becoming prime minister.
The scheme applies to England only. The Ministry of Housing, Communities and Local Government said it would help first-time buyers get onto the property ladder while stimulating housing supply. Burnham said too many young people are struggling with the cost of housing, with many giving up hope of ever having a home to call their own.
How will Your First Home work?
The mechanics follow a familiar pattern. The scheme combines a 2.5% buyer deposit, a 20% government equity loan and a mortgage covering the remaining 77.5%. In practice, a buyer purchasing a £250,000 new-build home would need a deposit of £6,250 and a government loan of £50,000, and would then borrow the rest through a conventional mortgage.
The homes must come from approved sellers. Buyers will purchase from developers signed up to the scheme, and the loan carries an initial interest-free period so that housing costs stay affordable. The government has also said it wants the support to reach those who need it most. Burnham said the scheme would aim to help people who do not have support from the “bank of mum and dad”.
To keep the scheme targeted, ministers have confirmed a household income cap, local property price caps and a developer contribution, with the detail to be set out at the Budget on 28th October. Buyers with large savings or high salaries are expected to be excluded from the scheme. Pre-registration is due to open by the end of 2026.
What we still don’t know
Several crucial details remain unconfirmed. The budget envelope, the level of the income cap, how the local price caps are set, the length of the interest-free period, the developer fee scale, and whether London gets a larger loan have not yet been announced. Some outlets have reported a five-year interest-free period and a £600,000 price ceiling, but some press reports have suggested the interest-free period will be five years, and the official length is still to be confirmed. Prospective buyers should treat those figures as unofficial until the Budget. Ministers have not yet confirmed whether there is an age restriction on the scheme.
The interest terms after the initial period will matter enormously. Under the previous scheme, interest equivalent to 1.75% of the equity loan became payable in year six. That later rose in line with inflation. Buyers will need to plan for how they will cope once free borrowing ends, whether by remortgaging, repaying part of the loan or selling.
How does it compare with Help to Buy?
Comparisons with Help to Buy are inevitable. That scheme was introduced in 2013 by then-Chancellor George Osborne and closed to new applicants on 31 October 2022. An evaluation found more than 387,000 properties were purchased through it, of which 328,000 were by first-time buyers.
The key differences are the deposit and the targeting. Help to Buy required a 5% deposit, and had regional property price caps and no income cap, whereas Your First Home will have local price caps and a household income cap. Housing Secretary Angela Rayner said the new scheme would “build on the lessons learned from previous schemes, while retaining the benefits”. Chancellor John Healey is due to set out the full details at the Budget.
There is one technical point lenders will scrutinise. A 2.5% deposit with a 20% loan produces a 77.5% mortgage, rather than the 75% typical under Help to Buy. Whether lenders treat the equity loan as equity or as a second charge, and how they price the mortgage, will determine how much of the modelled monthly saving is real.
Industry reaction: welcome, but supply is the real test
Housebuilders have long argued for demand-side support, so the industry response has been broadly positive, though with important caveats about supply. Paul Turner, CEO of the National House Building Council (NHBC), said: “News from Andy Burnham and Angela Rayner of a new equity loan scheme to help first-time buyers purchase new build homes is a welcome boost for the industry. The security of owning a high-quality, safe and sustainable home has for too long been out of reach for many hard-working people.”
Turner added a note of caution: “There is no one single solution to the housing challenge. Supply must also be addressed through accelerated planning reform and the easing of unnecessary regulatory burdens. What’s more it’s vital to keep focus on maintaining quality in the construction of new homes.”
The chief executive of the National Federation of Builders was similarly supportive, though more pointed about the risks. “First time buyer lending schemes are absolutely vital to buyers and builders, but without a huge increase in supply, there is a risk that buyers overpay for homes. This is why Labour’s commitment to 300,000 homes a year is so important.” The federation warned that “demand led policies that are unsupported by supply strategies create unintended consequences, such as fuelling house price rises and risking negative equity on certain home types, like apartments, because premiums were paid to get on the housing ladder rather than to purchase the appropriate homes.”
Political opposition centres on the same concern. The Conservatives warned the policy would leave first-time buyers taking on more debt and risk “pushing up the price of new homes”. Critics of Help to Buy made similar arguments, since the earlier scheme launched into a rising market and was accused of fuelling it. Supporters counter that today’s market is softer. The government’s own 1.5 million homes target also looks difficult, with Rayner acknowledging earlier this month that there was only a “slim chance” of meeting it by the next election.
What should first-time buyers do now?
For now, the sensible approach is preparation rather than commitment. Buyers thinking about a new build should keep saving, check their credit files and keep an eye on the Budget on 28 October, when the income cap, price limits and interest terms will be published. Anyone tempted by a low deposit should also stress-test their finances for the day the interest-free period ends, and consider what a fall in house prices could mean for a mortgage covering 77.5% of the value.
Your First Home could make ownership achievable for people who can manage monthly payments but not a large deposit. Whether it delivers lasting benefit or simply lifts new-build prices will depend on the details still to come, and on whether the government can back it with the supply of homes the industry is calling for.
