But a new Government scheme could make getting onto the property ladder easier, with deposits starting at 2.5%.
The £4.7bn Your First Home scheme, confirmed in the Autumn Budget, aims to help around 70,000 households in England buy their first home.
It will offer buyers a Government equity loan to reduce the amount they need to borrow through a mortgage, potentially saving them hundreds of pounds per month.
But how does it work, who qualifies and what do you need to know?
How does Your First Home work?
Under the scheme, you can buy an eligible new-build property with a deposit of between 2.5% and 15%.
The Government provides an equity loan worth up to 20% of the purchase price, and you take out a repayment mortgage to cover the rest.
For example, if you buy a £300,000 home with the minimum deposit and maximum equity loan it would look like this:
| Property price | £300,000 |
| Your deposit (2.5%) | £7,500 |
| Government equity loan (20%) | £60,000 |
| Mortgage required (77.5%) | £232,500 |
Without the scheme, buying the same property with a standard 5% deposit would mean you need a £15,000 deposit and a mortgage of £285,000.
So, Your First Home could halve the deposit you need and significantly reduce your monthly mortgage repayments.
You’ll own your home, but you’ll owe the Government money through the equity loan.
Who qualifies?
According to the Government’s official guidance, you’ll normally need to:
- Be a first-time buyer
- Buy an eligible new-build property in England
- Live in the property as your main home
- Have a household income of no more than £110,000 outside London or £140,000 in London
- Qualify for a mortgage from a participating lender
Property price caps will vary by location, from £220,000 in Middlesbrough to £355,000 in Manchester and £375,000 in Reading. The maximum is £650,000 in Inner London and £500,000 in Outer London.
How much could you save each month?
A smaller mortgage means lower monthly repayments. The Government illustrates this using a £300,000 property, a 30-year mortgage and a 5% interest rate.
With a standard 95% mortgage, repayments would be approximately £1,530 per month.
Under Your First Home, the mortgage repayments would be around £1,248 per month.
That’s a saving of £282 every month for the first five years, when the Government equity loan is interest-free.
However, interest charges on the equity loan start after five years.
The rate will be 1.5% in year six, rising to 3% from year seven. As an example, on a £60,000 equity loan, that would be an extra £75 per month in year six and £150 per month from year seven.
Remember, these interest payments are on top of your mortgage and they don’t reduce the equity loan.
Need to know: the equity loan must be repaid
This is probably the most important thing to understand about Your First Home.
The Government’s 20% contribution isn’t free money. It’s a loan that you’ll eventually have to repay.
And unlike a normal loan, the amount you owe changes with your property’s value.
If you buy a £300,000 home with a £60,000 equity loan and its value rises to £320,000, you’ll owe the Government £64,000 when you repay the loan.
If the property falls in value to £280,000, the amount owed would fall to £56,000.
The equity loan will normally be repaid when you sell, although you’ll also be able to repay some or all of it earlier.
You might hope to repay it by remortgaging after five years, but don’t assume this will be possible.
With a 2.5% deposit, you’ll have very little equity. Although mortgage repayments gradually build equity, borrowing enough to repay the Government’s 20% loan could be difficult.
You’d need enough equity in the property and enough income to qualify for a larger mortgage. And remember, if house prices rise, the amount you owe the Government rises too.
Think about how you’ll repay the loan, particularly if you hope to move to a bigger property.
Which mortgage lenders will offer the scheme?
Not every lender or new-build developer will participate in Your First Home.
The Government will publish details of participating lenders and developers before applications open.
Nationwide, winner of Best First-Time Buyer Mortgage Lender at the Your Mortgage Awards 2025/26, currently helps buyers using existing Government schemes onto the property ladder.
A mortgage broker can help you find mortgages you can use with the Your First Home scheme, check how much you could borrow and compare the available deals.
When can you apply?
Pre-registration is expected by the end of December 2026, allowing you to check eligibility without committing to a purchase.
Full applications will open in February 2027, with the first purchases expected to complete from April 2027.
What other help is available?
Your First Home won’t necessarily be the best option for everyone.
Some lenders offer mortgages with 2% deposits, while Skipton’s Track Record Mortgage requires no deposit at all.
These may mean higher monthly repayments, but you won’t have a Government equity loan to repay.
There’s also shared ownership, which allows you to buy a share of a property and pay rent on the remainder. Leeds Building Society, winner of Best Shared Ownership Mortgage Lender at the Your Mortgage Awards 2025/26, is one of the lenders offering mortgages for this type of purchase.
Is Your First Home right for you?
Your First Home could make homeownership possible sooner if you’re struggling with deposits or mortgage repayments. But look beyond the initial savings.
Think about what you’ll pay when the equity loan’s interest begins, how you might repay the loan and whether another route onto the property ladder could suit you better.
Getting independent mortgage advice before committing could help you make the right decision – not just for your first home, but for your financial future.
