Your First Home: the 2.5% deposit scheme explained

What has actually been announced

Prime Minister Andy Burnham announced a new government scheme called Your First Home on 26 September 2026, ahead of the Labour Party conference in Liverpool. The scheme would be open to first-time buyers in England with a deposit of 2.5 percent, providing them with an interest-free equity loan worth 20 percent of their new-build property's value. Housing Secretary Angela Rayner said that with the average starter home costing 230,000 pounds according to Rightmove, buyers could provide a 5,750 pound deposit and access up to 46,000 pounds in loan support. Rayner said the scheme would build on the lessons learned from previous initiatives and target support at first-time buyers who need it most.

It is important to be clear about what this is and what it is not. This was a conference announcement rather than a published scheme. There is no application form, no published rulebook and no confirmed eligibility checker. Chancellor John Healey is to present full details at the Budget on 28 October 2026, and pre-registration for the scheme is expected to open before the end of 2026. Until those details are published, the terms as stated are the terms as announced, and nothing more. The scheme draws direct parallels with the Help to Buy equity loan programme introduced by the coalition government in 2013, which similarly provided up to 20 percent of the property value. That programme closed to new applicants on 31 October 2022, so Your First Home would revive a model that has been dormant for four years.

How it compares with Help to Buy, in a table

The closest comparison is the Help to Buy equity loan as it operated between 2013 and 2022. The table below sets out the two schemes side by side, and marks clearly where the new scheme's terms are simply not known yet.

The headline difference is the deposit. Under Help to Buy, buyers contributed a 5 percent deposit and the government provided an equity loan for up to 20 percent of the property value, or 40 percent within London. Your First Home halves the deposit requirement to 2.5 percent and states a flat 20 percent government loan, with no London uplift mentioned in the announcement. The other differences are gaps rather than choices. Whether there are regional price caps as the 2021 scheme had, what happens after any interest-free period, and how repayment on sale works are all unanswered. Help to Buy helped around 361,000 people purchase a new-build home, according to figures from the Department for Levelling Up, Housing and Communities, so the scale of the previous scheme gives some sense of what demand for a successor could look like.

What the evidence says about the last scheme

The evidence from Help to Buy is mixed, and it is worth setting out both sides plainly. A House of Lords Built Environment Committee report concluded that Help to Buy had failed to provide value for money. The government's recent review suggested that the previous Help to Buy scheme increased house prices by around 2 percent over its course. Against that, Land Registry data shows house prices increased 33 percent in the five years following the scheme's announcement. That 33 percent figure covers a great deal else besides Help to Buy, including ultra-low interest rates, stamp duty holidays, a pandemic-driven revaluation of housing and long-running supply shortages. Critics of Help to Buy argued that it inflated new-build prices rather than making housing more affordable, and the government's own 2 percent estimate is consistent with that criticism, though 2 percent is a modest figure next to the wider market moves of the period.

Attributing price moves to a single scheme is genuinely difficult. Buyers using an equity loan compete for the same new-build stock as buyers without one, and developers price to the support available. At the same time, a scheme that helps people who cannot otherwise save a large deposit does not by itself create the homes those people need. The government is behind on its target of delivering 1.5 million new homes during this parliament, and commentators have noted that the precise impact of the new scheme will depend on details due to be announced in the October budget, and that its success depends heavily on housing supply. The KT article on the MHCLG evaluation sets out the government's own findings in more detail.

What a 2.5 percent deposit actually changes

The arithmetic is straightforward. On a 230,000 pound home, a 2.5 percent deposit is 5,750 pounds. A 5 percent deposit on the same home is 11,500 pounds. So the scheme would halve the upfront cash a buyer needs, compared with the Help to Buy threshold, and cut it further still against the average first-time buyer deposit today, which is well above 5 percent in most parts of England. For a buyer renting privately and saving monthly, the difference between 11,500 pounds and 5,750 pounds is measured in years of saving for many households. That is the case for the scheme: it shortens the gap between being able to afford a mortgage payment and being able to afford the deposit, and it targets first-time buyers who need it most, in Rayner's words.

The other side of the arithmetic matters just as much. A smaller deposit means a larger mortgage on the same property, so monthly repayments are higher and the loan-to-value ratio is less favourable. The equity loan is a debt secured on the home, not a grant. A 20 percent government stake rises and falls with the property's value, so the amount repaid is not the amount borrowed. If the home is worth more when the stake is bought back, more is owed; if it is worth less, less is owed, but the mortgage on the remaining 80 percent is unaffected by that fall. Buyers should also note that the scheme applies to new-build homes only, which typically carry a premium over equivalent older stock, and that the terms after any initial period have not been published.

What is still unknown

The Budget on 28 October 2026 has to answer a long list of questions before anyone can assess the scheme properly. Whether there are regional price caps as the 2021 scheme had is the first. Help to Buy (2021 to 2023) had regional price limits, set at 1.5 times the average first-time buyer price in each region in England, and was restricted to first-time buyers. Without caps, support flows to the most expensive markets and to the buyers who need it least. The interest or fee terms after any initial period are the second. Help to Buy was interest-free for five years and then charged a fee; Your First Home is described as interest-free, with no published end point. How repayment on sale works is the third, including whether the government takes a fixed percentage of the sale price or a sum linked to the original loan.

Income or price limits are the fourth open question, since none were mentioned in the announcement. How long the scheme runs is the fifth, and it matters because a time-limited scheme concentrates demand into its window. Whether it is open to buyers in Wales, Scotland and Northern Ireland is the sixth. Housing policy is devolved, so schemes announced for England do not automatically apply in Scotland, Wales or Northern Ireland. Until the Budget, all of these are unknowns rather than features, and the scheme's effect on prices, supply and buyer behaviour will depend on how each is settled.

What to do in the meantime

Nothing is open yet, so there is nothing to apply for. Pre-registration is expected before the end of 2026, after the Budget, and no portal or eligibility checker has been published. The Lifetime ISA, shared ownership and existing first-time buyer schemes are unaffected for now, and the KT first-time buyer guide covers how those work. Anyone currently saving towards a deposit, or holding a Lifetime ISA, or partway through a shared ownership purchase, has no reason to change course on the basis of a conference announcement alone.

The practical step is to wait for the Budget detail before changing any plan. The terms that matter most to an individual buyer, including price caps, fee terms, repayment mechanics and whether the scheme applies where they live, are all due on 28 October 2026. Once those are published, the comparison with Help to Buy can be made on real numbers rather than on a headline deposit figure. Until then, the scheme is a stated intention with a date attached, and the evidence from the last equity loan scheme is the best available guide to how it might behave.

Source: KT: the MHCLG Help to Buy evaluation.

Related coverage on Kael Tripton: First Time Buyer ISA: Government Consults on LISA Replacement Launching April 2028, First Time Buyer Guide UK 2026: Steps, Schemes and Costs Explained, Help to Buy added 15 percent to new homes but lifted prices, What Is the Help to Buy ISA? UK Meaning Explained, Contractor mortgages: how the day-rate method works.

Frequently asked questions

When does Your First Home open?

It does not open on announcement. Full details are due at the Budget on 28 October 2026, and pre-registration is expected to open before the end of 2026. Nothing is open yet, so there is nothing to apply for.

How much deposit would a buyer need?

The scheme as announced requires a 2.5 percent deposit. On an average starter home costing 230,000 pounds, that is 5,750 pounds, with up to 46,000 pounds in interest-free government loan support, according to Housing Secretary Angela Rayner.

Is the government loan free?

It is described as interest-free, but the terms after any initial period have not been published. Under Help to Buy, the loan was interest-free for five years and then a fee applied. The equivalent terms for Your First Home are due at the Budget.

Does the scheme apply in Scotland, Wales and Northern Ireland?

Housing policy is devolved, so schemes announced for England do not automatically apply in Scotland, Wales or Northern Ireland. The announcement covers England only, and no equivalent has been confirmed elsewhere.

How does it compare with Help to Buy?

Both are aimed at first-time buyers of new-build homes and both use a government equity loan of up to 20 percent of the property value. The deposit requirement is lower under Your First Home at 2.5 percent, against 5 percent under Help to Buy, which also offered 40 percent in London. Several terms of the new scheme are not yet known.