Government announces Your First Home equity loan scheme for first-time buyers in England

The government announced on Saturday 26 September 2026 that a new equity loan scheme, Your First Home, will be confirmed at next month's Budget, to support more people into homeownership in England¹. The scheme is expected to support 2.5% deposits, backed by 20% government-backed equity loans, for prospective first-time buyers purchasing a new-build property from a developer signed up to the scheme¹. The announcement was made by the Ministry of Housing, Communities and Local Government¹, and the Prime Minister Andy Burnham announced the scheme as he arrived for the annual Labour Party conference in Liverpool².

Under the structure set out, a buyer puts down a 2.5% deposit, a government-backed equity loan covers 20% of the purchase price, and a mortgage covers the remaining 77.5%³. The equity loan will have an initial interest-free period¹. The government says this could save buyers hundreds of pounds a month compared with a 95% mortgage¹. Sky News reported that a buyer purchasing their first home for £230,000, described as the national average for a starter home according to Rightmove, could put down a £5,750 deposit and access a loan of up to £46,000².

The scheme will set a household income cap with local property price caps, the detail of which will be set out at the Budget¹. The Guardian reported that household income caps and a deposit cap will be introduced to exclude those on the biggest salaries and with big savings pots, and that price caps will ensure people can only buy modest houses⁴. Developers will be expected to make a contribution when signing up to the scheme to help cover costs¹; the Guardian reported developers will pay a fee related to property values to participate, which will contribute to its running costs⁴. Funding is set to come from reprioritising existing government budgets².

Several details have not been reported. The government has not said what the income and price caps will be, how they will vary between areas, how long the equity loan will be interest-free, what interest will be charged afterwards, how and when buyers must repay the loan, or whether there will be restrictions on staircasing, remortgaging, letting or selling³. Which mortgage lenders and developers will participate, the overall budget and how many buyers the scheme is expected to help are also unconfirmed³.

The scheme has similarities with the Help to Buy equity loan scheme, which closed to new applicants in 2022 and completed its final purchases in 2023³. Help to Buy was limited to new-build homes in England and offered buyers a government equity loan of up to 20% of the property's value, but required buyers to put down at least 5%, and its equity loan was interest-free for five years³. In 2020, a further iteration allowed buyers to borrow up to 20% of a new-build property's value, or 40% in London, but was no longer available to movers and was subject to new regional caps on prices⁴. A government review calculated Help to Buy provided £25bn of social value to the UK in the last financial year⁴.

Why it matters for households

The scheme is aimed at first-time buyers in England buying a new-build property from a participating developer³. It is not yet a scheme that buyers can apply for³. The lower deposit requirement, compared with the 5% minimum under Help to Buy, would reduce the amount a buyer needs to save upfront, but it also means borrowing more and having less equity in the home from the outset³. The HomeOwners Alliance noted that a very small deposit comes with risks, including exposure if house prices fall, particularly where a new-build premium has been paid, and that this raises the risk of negative equity, making it harder to remortgage or move³. Its 2026 survey found affordability is the biggest barrier for those wanting to buy their first home, with 42% saying lower deposits would help³.

The scheme is a demand-side measure that may help some buyers access new-build homes already being built and could improve confidence for developers to start more schemes³. Official data published in the week of the announcement showed new-build starts in England rose by 15% in the year to June 2026, to 136,330, with second-quarter starts 20% higher than a year earlier³. The government is still a long way from its pledge to deliver 1.5 million additional homes in England over this Parliament³; the housing secretary Angela Rayner acknowledged there was only a "slim chance" the government would meet that target⁴.

What happens next

Further details, including costs and implementation timelines, will be announced by the Chancellor at the Budget next month¹. The Guardian reported the scheme will be announced by John Healey in the Budget and open for registration by the end of 2026⁴, and GB News reported more details will be announced in the Budget on 28 October⁵. Downing Street posts on social media suggested pre-registration will open at the end of the year³. The government also announced changes to empty dwelling management orders, reducing the period a property must be empty before it becomes eligible from two years to six months⁴.

For background on how these schemes work, see our guides to first-time buyer schemes in England, Scotland, Wales and Northern Ireland, how much deposit you need, mortgages on new-build homes and the Help to Buy equity loan in England.