Your First Home scheme: what first-time buyers need to know

The government has announced a new scheme called Your First Home, designed to help first-time buyers in England get on the ladder with a much smaller deposit. The headline is simple: a 2.5% deposit, topped up by a 20% government-backed equity loan, on a new-build home.

It isn't open yet. The full details are due in the Autumn Budget on 28 October, with pre-registration expected to open by the end of the year. So here's what we know so far, what we don't, and what you can do in the meantime.

What is the Your First Home scheme?

Your First Home is an equity loan scheme. You put down a deposit of at least 2.5% of the purchase price, the government lends you 20%, and a normal mortgage covers the remaining 77.5%.

The equity loan is interest-free for an initial period. That means your monthly outgoings are based mainly on a 77.5% mortgage rather than a 95% one, which can make a real difference to what you pay each month.

If this sounds familiar, it's because it works in a similar way to Help to Buy, which closed to new buyers a few years ago. There are some important differences, though, which we'll come to.

Who will be able to use it?

Based on what the government has said so far, you'll need to be:

• A first-time buyer
• Buying a new-build home in England
• Buying from a developer that has signed up to the scheme
• Within a household income cap
• Buying a property within a local price cap

The income cap and the price caps haven't been published yet. Both are due at the Budget on 28 October.

Will Your First Home work in North London and Hertfordshire?

It depends almost entirely on where the caps are set, and this is where local buyers need to pay close attention.

Prices here are well above the national average. At the moment, first-time buyers in Barnet pay around £464,000 on average, and new-build homes in Hertfordshire sell for around £570,000. Many of the new builds in our area are flats, which often sit at the lower end of that range, but family houses can be well above it.

Help to Buy gives a useful clue about how price caps might work. In its final years, the cap was £600,000 in London but only £407,400 across the East of England, which includes Hertfordshire. If Your First Home follows a similar regional approach, a lot of Hertfordshire new builds could fall outside the scheme, while London buyers may have more room.

The household income cap matters just as much. Plenty of first-time buyers in North London and Hertfordshire earn good salaries but still struggle to save a large deposit because of high rents and high prices. If the income cap is set too low, some of them won't qualify, even though they're exactly the people finding it hardest to get on the ladder.

We'll update this section as soon as the local caps are confirmed.

How would the numbers work?

Here's a simple example based on a £400,000 new-build home. This is illustrative only, as the final rules and caps haven't been confirmed.

With Your First Home, you'd put down a £10,000 deposit, the government would lend £80,000, and your mortgage would be £310,000.

With a standard 95% mortgage, you'd need a £20,000 deposit and a mortgage of £380,000.

If both mortgages were at the same rate of 4.5% over 30 years, the Your First Home route would cost around £1,570 a month against around £1,925 with the 95% mortgage. That's roughly £350 a month less while the equity loan is interest-free. In reality, 95% mortgages usually come with higher rates than lower loan-to-value deals, so the gap could be wider.

What we don't know yet

Several important details are still to be confirmed at the Budget:

• The household income cap
• The local property price caps
• How long the interest-free period lasts
• What interest or fees you'll pay once it ends
• How and when the loan has to be repaid
• The launch date

The repayment rules matter more than most people realise. Under Help to Buy, the loan was a percentage of the property's value, so if your home went up in value, the amount you owed went up with it. We don't yet know if Your First Home will work the same way. It's worth understanding this properly before you commit, because it affects the true cost of the scheme over time.

The things to think about

Your First Home could be a genuine help, but it isn't right for everyone.

It's new-build only. New builds can carry a price premium, and they can lose some of that value in the first few years. That's worth factoring in if you're only putting down 2.5%.

The interest-free period will end. Budget for what you'll pay afterwards, not just the first few years.

It adds a second loan to the picture. When you come to remortgage or sell, the equity loan needs to be dealt with too, which can make those moves a little more involved.

None of this means you should avoid it. It just means going in with your eyes open and the full numbers in front of you.

Should you wait for the scheme?

Not necessarily. If you want a new build and the caps work for you, Your First Home could be a great fit. But if you'd rather buy an older property, or you're in a hurry to move, there are options available right now.

95% mortgages are widely available at the moment, including through the government's permanent Mortgage Guarantee Scheme, and they work on any type of property, not just new builds. Family help, joint borrower sole proprietor mortgages and some lenders' higher income multiples can also help bridge the gap.

The best thing you can do today is get mortgage-ready. Know how much you can borrow, check your credit file, and get your paperwork in order. That way, whichever route you take, you're ready to move quickly when the right home comes along.

How we can help

We help first-time buyers across Edgware, North London and Hertfordshire work out the smartest way onto the ladder. We'll look at your situation, run the numbers on every route that's open to you, and give you a clear recommendation.

If you'd like to know if Your First Home could work for you, or what you could do right now, email solomon@kudosmortgages.com or book a call. We'll update this guide as soon as the full details are announced.

Frequently asked questions

When does the Your First Home scheme open?

It isn't open yet. The government will confirm the details at the Budget on 28 October, and pre-registration is expected to open by the end of the year.

Can I use Your First Home to buy an older property?

No. Based on what's been announced, the scheme is only for new-build homes from developers signed up to it. If you want an older property, a standard 95% mortgage is the more likely route.

Is Your First Home the same as Help to Buy?

It's similar, but not identical. Your First Home needs a 2.5% deposit rather than 5%, and it's expected to have a household income cap and local price caps. The length of the interest-free period hasn't been confirmed yet.

Can I use Your First Home in London or Hertfordshire?

Yes, as long as you're buying a new build from a participating developer in England and the property falls within the local price cap. The caps haven't been published yet, and with local prices well above the national average, they'll decide how useful the scheme is here.

Is the scheme available in Scotland, Wales or Northern Ireland?

No. The scheme announced so far is for England only.

Should I start saving or wait for the details?

Keep saving and get mortgage-ready now. A bigger deposit only widens your options, and knowing what you can borrow means you can act quickly, whichever route suits you best.

Your home may be repossessed if you do not keep up repayments on your mortgage.