Contents
How the scheme works
Your First Home is a government scheme in England for first-time buyers of new-build homes. The terms on GOV.UK, updated 3 November 2026, are:
- A deposit of at least 2.5% of the price.
- A government equity loan of 20% of the price.
- No interest on the loan for the first five years, then 1.5% in year 6 and 3% a year from year 7.
- When you repay, you pay back 20% of the home's value at that time, set by an independent valuation.
Your mortgage covers the rest: at least 77.5% of the price with a 2.5% deposit.
What you pay each month
Take a £250,000 new-build with the minimum 2.5% deposit:
- Deposit: £6,250
- Equity loan: £50,000
- Mortgage: £193,750
At an example mortgage rate of 4.5% over 30 years (use the rate your lender quotes), the mortgage costs about £982 a month. GOV.UK's own worked example charges the loan interest on the original amount borrowed, so on a £50,000 loan:
| Period | Mortgage | Loan fee | Total a month |
|---|---|---|---|
| Years 1 to 5 | £982 | £0 | £982 |
| Year 6 | £982 | £62.50 | about £1,044 |
| Year 7 on | £982 | £125 | about £1,107 |
The fee does not pay the loan down. It is a charge for borrowing, and the full 20% share is still owed.
Run your own numbers: Your First Home Scheme Calculator
Enter the price, your deposit, your mortgage rate and a guess at house prices to see the monthly cost by period and what you would repay after 5 years, 10 years and at the end of the mortgage.
What the loan costs after 10 years
Say you repay the whole loan after 10 years. By then you have paid £6,750 in fees (£750 in year 6, then £1,500 a year for four years). What you repay depends on the home's value:
| If the home's value | Value after 10 years | You repay (20%) | Cost above the £50,000 borrowed, with fees |
|---|---|---|---|
| Stays flat | £250,000 | £50,000 | £6,750 |
| Rises 2% a year | £304,749 | £60,950 | £17,700 |
| Falls 1% a year | £226,096 | £45,219 | £1,969 |
This is the part people miss. The loan is a share of the home, not a fixed sum. If prices rise, the government shares the gain; if they fall, it shares the loss. The yearly change in value is an assumption you choose, not a forecast.
Who can use it
- First-time buyers in England buying a new-build home.
- Household income up to £110,000, or £140,000 in London.
- A price at or below your local authority's cap. Caps run from £215,000 to £650,000; check yours on the GOV.UK price cap list.
Applications are expected to open in February 2027, with the first sales in April 2027.
What is not decided yet
- How the interest is worked out. GOV.UK gives the rates and a worked example, but not a formal rule, and does not say whether the rate rises over time. The calculator assumes no rise and lets you change it.
- Full eligibility rules and how the fee is collected. GOV.UK says these come before applications open.
- Fees for repaying early. To be published later.
Until those rules are out, four questions are worth putting to the developer, your lender or a mortgage adviser before you commit: when exactly the year 6 fee starts, whether it rises after year 7, what it costs to repay the loan early, and how the valuation is done when you repay. Run the calculator with a rising house price as well as a flat one, so you see the range rather than one number.
Questions people ask
How much does the Your First Home equity loan cost?
Nothing for the first five years. Then 1.5% of the loan in year 6 and 3% a year from year 7. On a £50,000 loan that is £62.50 a month in year 6 and £125 a month after that, going by GOV.UK's worked example.
How much do I pay back on the equity loan?
You repay 20% of your home's value at the time you repay, not the amount you borrowed. If a £250,000 home is worth £304,749 after 10 years, you repay £60,950.
What deposit do I need for Your First Home?
At least 2.5% of the price. The government lends 20% and your mortgage covers the rest.
What are the income limits?
Household income up to £110,000, or £140,000 in London.
When can I apply?
Applications are expected to open in February 2027, with the first sales in April 2027.