New Scheme for First-Time Buyers: What We Know So Far

First-time buyers (FTBs) with a deposit of just 2.5% could soon get a helping hand from the government.

Getting onto the housing ladder is tough, especially if you don’t have relatives with deep pockets to help.

But now, Prime Minister Andy Burnham has pledged to do more to help out FTBs who can’t access the Bank of Mum and Dad.

The scheme is called Your First Home (no prizes for imagination with that title), and this is what we know so far.

New scheme announced for FTBs

• FTBs will need a minimum deposit of 2.5%.
• Eligible FTBs will get a 20% equity loan with an initial interest-free period. They’ll also need a mortgage to cover the remaining 77.5% of the property’s value.
• As it currently stands, the scheme will only apply to new-build homes.

Case study

An FTB looking to buy a new-build home priced at £200,000 would need to stump up a £5,000 deposit. The government would provide an interest-free equity loan of £40,000, while the buyer would need to secure a £155,000 mortgage to cover the rest.

The government believes this scenario would save an FTB hundreds of pounds each month, compared with paying a 95% LTV mortgage.

Restrictions, rules and caps

Critics of the last scheme for FTBs (Help to Buy, which ended in 2023) argued that it disproportionately aided higher earners and didn’t do enough for those on lower incomes.

Your First Home is expected to be more carefully targeted. There will also be a price cap on how much you can spend on a property under the scheme (the limit was £600,000 under Help to Buy).

We don’t yet know what the caps on income or property price will be, or how long the equity loan will be interest-free. But we’ve been promised more details as part of the Budget announcement on October 28.

Early response

Many have welcomed the idea as FTBs play a critical role in the housing market (without them, second-steppers can’t move on). There’s also a consensus that the sluggish house-building industry needs a boost.

Some, however, are pushing for the scheme to be extended to cover all homes, not just new-builds, as this would provide FTBs with a broader range of properties to choose from.

Issues for FTBs to consider

Stay tuned for the Budget later this month to learn exactly how the scheme will work – and if it could help you.

But be aware that even without the new scheme, several market factors are currently working in favour of FTBs.

It’s a buyer’s market, meaning there is a good supply of properties to choose from and some room for negotiation.

And while property isn’t as affordable as it was, say, two decades ago, the situation is improving.

In 2022, the median home in England cost 9.5 times average earnings. In 2025, this figure dropped to 7.6.

If it’s your dream to stop renting and buy your own home, call us. We can get your property search started today.