Your First Home Scheme explained: eligibility, limits and the catches to watch – Autumn Budget 2026

 
Announced on 26 September 2026, the ‘Your First Home Scheme’ aims to make purchasing a home more affordable for first-time buyers, by effectively topping up the initial deposit a buyer makes with a 20% equity loan.

This scheme is for England only, with pre-registration opening by the end of December 2026.

How does the “Your First Home Scheme” work?

The buyer has to put up a deposit of at least 2.5%, up to a maximum of 15%, with the government adding a further 20% deposit by way of an equity loan to support the initial purchase of the home. This scheme is only for first-time buyers, and the property purchased must be a New-Build from an approved property developer participating in the scheme.

As the buyer only needs to front a very small deposit, this scheme should make getting on the first rung of the property ladder more affordable, particularly for those who do not have large savings or cannot be assisted much by others (or as the Chancellor says; ‘by the bank of mum and dad’).

The equity loan itself is also interest-free for the first five years, before a gradual interest rate rise thereafter. This should reduce some of the sting of mortgage payments, and means each repayment is solely increasing the buyer’s equity in the property.

Pre-registration for the scheme is set to open by end of December 2026, with full applications opening from February 2027. The first loans should be issued from April 2027.

What are the limits?

The government have prescribed caps on eligible households’ income and property prices:

• Household income is capped at £110,000 for those outside of London, increasing to £140,000 for households inside London.
• The house price caps will be set based on local authority median prices. For outer London the cap is £500,000, rising to £650,000 for inner London.

Our view

Whilst a reduced mortgage balance, by virtue of increased deposit, certainly sounds promising, there are several important details to consider:

• The government-backed contribution is an equity loan, interest-free for a set period. Whilst buyers will be solely paying towards equity at first, after the initial interest-free period ends, it is unconfirmed what rates of interest the buyer will be liable to pay and the burden this may have.
• It is still a loan. Buyers will still need to budget for this element alongside their mortgage repayments.
• Whilst the household income cap is designed to ensure the scheme reaches those most in need, higher incomes do not necessarily correlate to higher savings. It therefore may unreasonably punish those who need a boost to their deposit capabilities.
• Buyers will need to pay attention to the house price cap set in their region, to find out what properties are eligible in their area. In theory, this system should ensure parity of the scheme across the country.
• Whilst a topped-up deposit may make buyers tempted into increasing the price of homes within their budget, they should be wary that the Stamp Duty Land Tax threshold is still £300,000 for first-time buyers unless they want to risk being subject to an unexpected tax bill!

Ultimately, the scheme looks like a promising method to assist first-time buyers making the difficult first step onto the housing ladder. It also should be a boost for property developers by increasing the affordability of new homes for first-time buyers.

If the Budget has raised any questions for you, book your place on our question time webinar this Friday at 9:30am. Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.