First-time buyer schemes: what exists now and what is coming

The schemes at a glance

Six main forms of help are relevant to a first-time buyer in England. They differ in what they give you, who can use them and whether they are open today. The table below sets out the position as it stands.

Several of these can be combined. A Lifetime ISA can be used as the deposit on a shared ownership purchase, and the mortgage guarantee scheme can sit alongside a First Homes purchase. The combinations that work depend on the rules of each scheme and on the lender. What matters when you are working out your position is to separate the schemes that are open today from the one that has only been announced. Your First Home has no application process at present, so it cannot form part of a purchase that completes now.

The Lifetime ISA in detail

The Lifetime ISA is a savings account with a government bonus attached. You can open one between the ages of 18 and 39, pay in up to 4,000 pounds a year, and receive a 25 percent government bonus of up to 1,000 pounds a year. The bonus is paid monthly and continues until you reach age 50. The 4,000 pound limit counts towards your overall annual ISA allowance, so it is not an extra allowance on top of the standard ISA limit. If you already use a cash ISA or a stocks and shares ISA, the Lifetime ISA sits inside the same overall ceiling.

To use the money for a first home, the property must cost no more than 450,000 pounds, and the account must have been open for at least 12 months before the funds are used for the purchase. That 12 month rule is a hard deadline, not a guideline. If you open an account and then try to use it for a purchase eleven months later, the funds cannot be used for the home in the way you intended. The 450,000 pound cap applies to the property price, and it applies whether you are buying alone or with someone else.

The withdrawal charge is the part that catches people out. If you take money out for any purpose other than a first home before age 60, or use it for a property above the 450,000 pound cap, a 25 percent government withdrawal charge applies. Because the charge is calculated on the total amount withdrawn, including the bonus, it can leave you with less than you originally paid in. A saver who pays in 4,000 pounds and receives a 1,000 pound bonus has 5,000 pounds in the account. A 25 percent charge on that 5,000 pounds is 1,250 pounds, leaving 3,750 pounds, which is 250 pounds less than the original 4,000 pounds paid in. The charge is designed to recover the bonus and apply a penalty, and it does not distinguish between a change of plan and an emergency.

Shared ownership and First Homes

Shared ownership allows you to buy a share of a property, commonly between 10 and 75 percent, and pay rent to the landlord on the remaining share. You take a mortgage on the share you buy, and you pay rent on the part you do not own. Later, you can buy further shares, a process known as staircasing, which increases the proportion of the property you own and reduces the rent. The share you can buy, the rent charged and the terms of staircasing are set by the scheme provider and can vary between developments and areas.

Two costs catch people out with shared ownership. The first is the service charge, which covers the upkeep of shared areas and the building, and which is payable in addition to the mortgage and the rent. The second is the lease itself. Shared ownership properties are usually leasehold, so the length of the lease, the ground rent and the rules on alterations all matter. A short lease can affect both the value of the share and the ability to sell it later. When you assess what a shared ownership purchase costs each month, the mortgage, the rent and the service charge all need to be added together, and the total can be higher than the mortgage on a smaller outright purchase.

First Homes work differently. They are new-build properties sold to first-time buyers at a discount of at least 30 percent to market value. The discount is retained on the property and passed to subsequent eligible buyers, so it does not disappear when you sell. That keeps the home affordable for the next buyer, but it also means the resale value is set by the discounted price rather than the full market price. Availability depends on local schemes, and not every area has First Homes available. Where a local scheme exists, the criteria for who can buy are set locally, so the qualifying rules can differ from one council area to the next.

Deposits and the mortgage guarantee

The size of your deposit determines the loan-to-value ratio of your mortgage, and that ratio drives the rate you are offered. A 5 percent deposit on a 200,000 pound property means a 10,000 pound deposit and a 190,000 pound mortgage, a 95 percent loan-to-value. A 10 percent deposit on the same property means 20,000 pounds down and a 180,000 pound mortgage, a 90 percent loan-to-value. The difference in the amount borrowed is 10,000 pounds, but the difference in the monthly cost is usually larger than that alone would suggest, because the interest rate on a 95 percent mortgage is typically higher than on a 90 percent one.

The mortgage guarantee scheme is designed to support 95 percent lending. It provides a government guarantee to lenders offering 95 percent loan-to-value mortgages, allowing purchases with a 5 percent deposit on properties up to 600,000 pounds. The guarantee sits behind the lender rather than in front of the buyer. It does not reduce the amount you owe, and it does not change the fact that you are borrowing 95 percent of the property price. What it does is make lenders more willing to offer that level of borrowing, which widens the pool of mortgages available at 95 percent loan-to-value.

The rate on a 95 percent mortgage is usually higher than on a 90 percent mortgage because the lender is taking more risk. If property prices fall and the lender has to repossess, a smaller deposit means less cushion before the lender suffers a loss. The guarantee reduces that risk for the lender, but it does not remove it, and the pricing of the mortgage reflects the remaining risk. Over the life of a mortgage, a higher rate on a larger loan adds up. A buyer weighing a 5 percent deposit against a 10 percent deposit is weighing a lower upfront cost against a higher monthly cost, and the right balance depends on savings, income and how long the mortgage is expected to run.

What Your First Home would add

Prime Minister Andy Burnham announced a scheme called Your First Home on 26 September 2026. It is open to first-time buyers in England with a deposit of 2.5 percent, and it provides an interest-free equity loan worth 20 percent of a 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. Those figures illustrate the shape of the scheme rather than a confirmed set of terms for every buyer.

Nothing under Your First Home is open at present. Full details are due at the Budget on 28 October 2026, and pre-registration is expected to open before the end of 2026. Until those details are published, the deposit level, the loan level and the eligibility rules are announcements rather than application criteria. A buyer who wants to use the scheme cannot do so now, and a purchase that completes before the scheme opens cannot be brought within it.

The equity loan element needs to be understood as a debt. An equity loan is secured on the property, and a government stake expressed as a percentage of value rises and falls with the property price. That means the sum repaid differs from the sum borrowed. If the property rises in value, the 20 percent stake is worth more, and more has to be repaid. The scheme draws direct parallels with the Help to Buy equity loan introduced in 2013, which closed to new applicants on 31 October 2022. Buyers who remember Help to Buy will recognise the structure, and the same point about the rising value of a percentage stake applies. For the announcement itself, see the KT news article on the scheme.

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 Lifetime ISA is the exception in one respect: it is UK-wide, so the 4,000 pound annual limit, the 25 percent bonus, the 450,000 pound property cap and the 12 month rule apply wherever you are buying in the UK. A first-time buyer in Glasgow or Cardiff can use a Lifetime ISA on the same terms as a buyer in Manchester, provided the property meets the price cap and the account has been open long enough.

Stamp duty is where the nations diverge most clearly. Stamp duty does not apply in Scotland, which charges Land and Buildings Transaction Tax, or in Wales, which charges Land Transaction Tax. Each has its own first-time buyer rules, and the thresholds and reliefs are set by the devolved administrations rather than by Westminster. First-time buyers in England and Northern Ireland receive stamp duty relief, paying no stamp duty on the first portion of the purchase price, with the relief withdrawn entirely above a set purchase price. A buyer in Scotland or Wales needs to look at the devolved tax rather than the stamp duty rules.

Shared ownership and new-build schemes also differ by nation. The shared ownership model, the share sizes available and the terms of staircasing are set within each nation's own framework, and the same is true of new-build support. Your First Home is announced for England only, so a buyer in Scotland, Wales or Northern Ireland should not assume it will be available to them. The practical step for a reader outside England is to check their own government's scheme pages, because the eligibility rules, the price caps and the application routes are set separately. The Lifetime ISA remains the one element that travels across the whole of the UK.

Source: GOV.UK: Lifetime ISA.

Related coverage on Kael Tripton: Lifetime ISA Withdrawal Charge: The 25% Penalty, the Exemptions and the 2028 Reform, First-Time Buyer ISA: Government Launches Consultation to Replace Lifetime ISA, What Is shared ownership? UK Meaning Explained, Shared Ownership Mortgage UK 2026: How the Scheme Works and Who Qualifies, Andy Burnham's Property Tax Plan Would Replace Council Tax and Stamp Duty.

Frequently asked questions

How much can be paid into a Lifetime ISA each year?

Up to 4,000 pounds a year, with a 25 percent government bonus of up to 1,000 pounds a year, paid monthly until age 50. The 4,000 pound limit counts towards the overall annual ISA allowance.

What happens if a Lifetime ISA is used for something other than a first home?

A 25 percent government withdrawal charge applies if the money is used for any purpose other than a first home before age 60, or for a property above the 450,000 pound cap. The charge can leave you with less than was paid in.

How long must a Lifetime ISA be open before it can be used for a property?

At least 12 months before the funds are used for a property purchase.

What is the property price cap for a Lifetime ISA?

The property must cost no more than 450,000 pounds.

Is Your First Home open to applications?

No. It was announced on 26 September 2026, full details are due at the Budget on 28 October 2026, and pre-registration is expected to open before the end of 2026.