Your First Home scheme: what first-time buyers need to know after the October 2026 budget
Last updated: 02 November 2026
The October 2026 Budget backed Your First Home, a new equity loan scheme for first-time buyers in England. The scheme is designed to help eligible buyers purchase a new-build property with a deposit from 2.5% and a government-backed equity loan of 20%.
This guide explains what has been announced about the scheme so far and the legal work involved in buying a home with an equity loan. Further details about how the scheme will operate and who will qualify are still to be confirmed by the government, so the information below reflects what is available as at 28 October 2026. Detailed eligibility criteria and loan documents will therefore need to be checked before you commit to a purchase.
If you are thinking about buying your first home, our experienced conveyancing team are happy to explain what this could mean for you.
What the October 2026 Budget confirmed
The Budget provided more information about Your First Home, including £4.7 billion in government-backed lending reported in the scheme’s guidance material. Applications are expected to open from February 2027, ahead of the scheme’s planned launch in spring 2027. The government says Your First Home is intended to help 70,000 people buy their first home.
For prospective buyers, this provides a clearer indication of when the scheme will become available. Exact application dates, participating providers and details of the purchase process should be checked against the government’s official launch guidance once published.
What the Your First Home scheme is
The Ministry of Housing, Communities and Local Government updated its original announcement from September, with further information about Your First Home in the Autumn Budget. The scheme is set to offer for eligible first-time buyers:
- A deposit of at least 2.5% of the purchase price.
- A repayment mortgage from a participating lender.
- A government-backed equity loan of 20% of the purchase price.
- No interest on the equity loan for an initial period of 5 years.
Who is eligible for the Your First Home scheme
The scheme is for first-time buyers in England. You will need to buy a new-build home from a developer that has signed up. There will be a limit on household income and a cap on the price of the home, which will vary by area.
Before reserving, check the criteria for your household and the property. This includes any conditions affecting joint buyers, previous property ownership or residency.
You will also need a suitable mortgage from a participating lender. Having the minimum deposit does not guarantee that you will meet the scheme criteria or your lender’s affordability requirements.
Full eligibility rules are still to be published, with the government confirming these details will be available before applications open in February.
How the Your First Home scheme works
Here is an example of how the numbers could look on a £250,000 new-build home. The illustration uses the announced funding proportions and assumes that the buyer, property and mortgage qualify.
| Funding | Share of price | Amount |
|---|---|---|
| Your deposit | 2.5% | £6,250 |
| Government equity loan | 20% | £50,000 |
| Your mortgage | 77.5% | £193,750 |
| Total | 100% | £250,000 |
With a standard 95% mortgage, you would need a £12,500 deposit and a £237,500 mortgage.
The example excludes legal fees, tax and other purchase costs. Although the scheme would reduce the mortgage required, the equity loan creates a separate repayment obligation.
Monthly mortgage payments could be lower. The overall cost will also depend on mortgage rates, fees, any later equity loan charges and the terms for repaying the loan.
Repaying the equity loan and paying interest
Before proceeding, you will need to understand how the equity loan is repaid, when repayment becomes due and whether the amount depends on the property’s value at that time. More information from the government is again expected before the scheme opens.
The initial guidance is that the equity loan will be interest-free for the first five years. With an interest rate of 1.5% applicable from year six and this rising to 3% from year seven.
It will be important to understand these terms before agreeing to them, and any conditions affecting a sale, remortgage or early repayment. Interest payments and repayment of the loan balance are separate matters.
Our team will explain the legal obligations once the relevant scheme documents are available for your purchase.
How the scheme fits with your mortgage and deposit
Speak to a mortgage adviser about the lenders and products available for the scheme. The lender will look at your income, your spending, your credit history and whether you can afford the payments.
Whether a lender will offer you a mortgage depends on its requirements, the property and the scheme rules.
The mortgage and equity loan documents will explain how each loan is secured against the home and the obligations attached to it. A charge is a legal right over the property that secures what you owe.
If a family member plans to contribute to your deposit, tell your mortgage adviser and solicitor early. Acceptance will depend on the lender’s requirements and the final scheme conditions. Your solicitor will need evidence of where the money came from, and your lender may require confirmation that the contribution is a gift.
The conveyancing process for first-time buyers
Conveyancing is the legal work that makes a home yours. Buying a new-build with an equity loan adds a few extra steps. Here is how we will guide you through it:
- Getting started. We check your ID and where your deposit has come from. We also give you a clear quote of costs.
- Checking the contract. We look at the contract, plans, planning permission and building regulations sign-off. We also check any rules on what you can do with the property and the relevant building warranty arrangements.
- Searches. We carry out local council, drainage and environmental searches. We check whether the council and water company will take over the roads and sewers, or whether you will pay an estate charge.
- The equity loan. We review the scheme documents for your purchase, explain the loan agreement and deal with the relevant legal requirements, forms and deadlines.
- Your mortgage. We report to your lender and confirm the home is suitable for the loan.
- Exchange and completion. We advise you before the contract becomes binding and coordinate completion under the agreed contract, mortgage and scheme requirements.
- After you move in. We handle the relevant Stamp Duty Land Tax return and payment where required, and apply to register your ownership and the relevant security at HM Land Registry.
If you are buying a leasehold flat, we will also check the length of the lease, the service charge and any ground rent. Our leasehold team can help with this.
Working with conveyancing solicitors in Norwich
Fosters Solicitors supports buyers across Norfolk and Suffolk. Our conveyancing solicitors in Norwich can help with your purchase, and we also have offices in Wymondham and Lowestoft.
Contacting a solicitor early gives you time to discuss the property, your funding and any reservation deadline. We can explain the legal steps and keep you informed as the transaction progresses.
Timescales and costs
New-build developers may set a short deadline for exchange after reservation. Ask for that deadline in writing and share it with your solicitor and mortgage adviser. Your mortgage, legal questions and the scheme paperwork can all affect how quickly things move.
If the home is still being built, you may complete weeks or months after exchange. Your solicitor should explain the completion provisions, any long-stop date (a final deadline that protects you if building work runs very late), and what happens if construction is delayed.
As well as your deposit, it is worth setting money aside for:
- Legal fees and search fees.
- The HM Land Registry fee.
- Mortgage fees and any valuation fees.
- The developer’s reservation fee.
- Removal costs.
- Any survey or snagging inspection you arrange.
- Any Stamp Duty Land Tax due.
You can see our costs on our fees and service information page or contact us for a tailored quote.
Stamp Duty Land Tax for first-time buyers
Stamp Duty Land Tax is based on the full price of the home, not just the amount of your mortgage. First-time buyers in England currently pay:
| Purchase price | Stamp Duty Land Tax |
|---|---|
| Up to £300,000 | No tax |
| £300,001 to £500,000 | 5% on the part above £300,000 |
| Over £500,000 | No first-time buyer relief. Normal progressive residential rates apply. |
To get this relief, every buyer must be a first-time buyer. The home must also be your only or main home.
Other circumstances, including non-UK residence, can affect the calculation. We will check the position for your purchase against the current SDLT rules.
First Time Buyer ISA and Lifetime ISA announcements
The Budget also announced a new First Time Buyer ISA to help people save for a deposit. Its rules and availability should be checked before deciding how to use it.
The Treasury’s Budget announcement also announced a reduction in the Lifetime ISA withdrawal charge to 20% for first-time buyers purchasing above the existing £450,000 property price cap.
A 20% charge still removes money from the amount withdrawn. For example, a £4,000 contribution with a £1,000 government bonus produces £5,000. A 20% charge on that amount is £1,000, leaving £4,000 before any interest or investment changes.
Check the arrangements with your ISA provider and solicitor before withdrawing funds for a purchase.
Getting ready with Fosters Solicitors
There are a few things you can do while the scheme’s launch arrangements are being put in place:
- Keep saving.
- Check your credit file.
- Gather recent payslips and bank statements.
- Speak to a mortgage adviser.
When considering a new build, ask whether the developer expects the home to be available through Your First Home. Have your solicitor review the reservation conditions and funding position before you make commitments.
The residential property team at Fosters Solicitors can explain the legal work involved and provide a quote. Please get in touch to discuss your plans.
FAQs
What is the Your First Home scheme?
The Your First Home scheme is a government equity loan for first-time buyers in England. It was announced on 26 September 2026 with more details provided in the Autumn Budget. It is designed to help eligible buyers purchase a new-build home with a 2.5% deposit and a 20% government-backed equity loan.
When does the Your First Home scheme start?
The government’s Budget coverage reported a planned launch in spring 2027, with applications expected to open from February 2027. More official guidance regarding the scheme is expected before applications open.
Can I use the Your First Home scheme to buy an older home?
Based on the October Budget 2026 announcement, the scheme is for new-build homes sold by developers that have signed up. It is not for older homes.
Does a 2.5% deposit mean I will qualify?
You will also need to meet the scheme criteria, buy an eligible property and obtain an appropriate mortgage. Your lender will assess affordability.
Will I need to repay the government equity loan?
Yes. Before proceeding, check the repayment terms, the length of the interest-free period and any later charges. Your solicitor can explain the legal obligations in the agreement.
Do I need a solicitor for a Your First Home purchase?
Yes. A conveyancing solicitor will handle the legal work for your purchase, mortgage and equity loan. They will also register you as the owner at HM Land Registry.
This article was first published on 23 October 2026 and updated on 02 November 2026. It provides general information and should not be relied upon as advice on a specific legal matter.
