Your First Home scheme: how does the 20% equity loan work?
The deposit, the loan, the interest and the local price caps, from the government's guidance.
Your First Home would lend first-time purchasers 20% of a new-build's price, at 0% for five years. For sellers, open for offer lets you test the market before you list. Applications are expected to open in February 2027, says GOV.UK.
Last reviewed 7 November 2026. Status: Announced in Budget 2026, 28 October 2026; not yet open (applications expected February 2027).
How does the equity loan work?
A buyer puts down a deposit of at least 2.5%. The government lends 20% of the price. A repayment mortgage from a participating lender covers the rest.
| Source of funding | Your First Home | Standard 95% mortgage |
|---|---|---|
| Deposit | £7,500 | £15,000 |
| Government equity loan | £60,000 | None |
| Repayment mortgage | £232,500 | £285,000 |
On that example the deposit halves, from £15,000 to £7,500, and the mortgage falls by £52,500.
The buyer owns the home from completion. The government is not a joint owner or a landlord. Lenders still run their usual affordability and credit checks.
What does the loan cost after five years?
No interest is charged in years 1 to 5. In year 6 the rate is 1.5%. From year 7 it is 3%. Interest is paid separately and does not reduce the loan.
| Period | Standard 95% mortgage | Your First Home, total |
|---|---|---|
| Years 1 to 5 | £1,530 | £1,248 |
| Year 6 | £1,530 | £1,323 |
| From year 7 | £1,530 | £1,398 |
The totals include equity loan interest of £75 a month in year 6 and £150 from year 7. GOV.UK says the table is an illustration, not a mortgage quote.
This explains how the scheme works. It is not advice on whether it suits you; a mortgage broker can give that.
What costs sit outside the scheme?
GOV.UK lists costs the illustration leaves out: mortgage fees, insurance, council tax, service charges, estate charges and maintenance.
It also asks buyers to consider whether they could afford higher mortgage rates in future, and the cost of selling or remortgaging later. It says buyers should "strongly consider" independent financial and legal advice.
What if the home's value changes?
The loan is a share of the home's value, not a fixed sum. Borrow 20% and you normally repay 20% of the value at the time, set by an independent valuation.
GOV.UK's example: a £300,000 home with a £60,000 loan. Valued later at £320,000, the repayment is £64,000. Valued at £280,000, it is £56,000.
The loan is normally repaid on sale, and can be repaid earlier in part or in full. Full repayment rules are due before applications open.
Who can use it, and where?
Buyers must normally be first-time buyers, buying a new-build in England as their main home. Household income must be £110,000 or less, or £140,000 or less in London.
The Budget sets the deposit at a minimum of 2.5% and a maximum of 15%. Full eligibility rules are due before applications open.
Each council area has a price cap. The Budget set London caps at £650,000 inner and £500,000 outer. Caps for the towns we cover:
| Local authority | Price cap |
|---|---|
| Cambridge | £505,000 |
| Buckinghamshire (includes Marlow) | £430,000 |
| Oxford | £415,000 |
| North Northamptonshire (includes Oundle) | £325,000 |
| Peterborough | £315,000 |
| Rutland | £310,000 |
| South Kesteven (includes Stamford) | £290,000 |
When does it open?
Applications are not open yet. Pre-registration does not commit anyone to buying through the scheme. GOV.UK says it will give more information on eligibility and the price cap in each area.
Before applications open, the government says it will publish full terms, how equity loan interest is collected, and repayment rules, including minimum repayments and any fees.
Pre-registration and guidance are due by the end of December 2026. First applications are expected in February 2027, and first sales under the scheme in April 2027.
Funding is £4.7 billion over five years: £700 million in 2027 to 2028, then £1 billion a year. The Budget says it would help around 70,000 households.
What does it mean if you are selling?
The scheme covers new-build homes from participating developers. A first-time buyer cannot use it on an older home bought from its owner, and the price caps do not apply to resale homes.
open for offer is the pre-market, the market that exists before a property is ever advertised. First-time buyers may be comparing your home with new-builds bought through the scheme. A market estimate shows where your price sits.
Sources and corrections
Sources, checked 7 November 2026: GOV.UK Your First Home guidance and price caps, both updated 3 November 2026.
Also the Budget 2026 document, published 28 October 2026.
Contains public sector information licensed under the Open Government Licence v3.0.
Corrections: none so far. If we find an error, we will correct it here, with the date and the figure we changed.
Common questions
Is the Your First Home scheme open yet?
No. GOV.UK guidance updated 3 November 2026 says it is expected to open for applications in February 2027, with pre-registration before the end of 2026.
Can I use Your First Home on an older house?
No. The guidance says buyers must buy an eligible new-build home in England from a participating developer.
Is the Your First Home equity loan interest-free?
For the first five years. GOV.UK says the rate is 1.5% in year 6 and 3% from year 7.