Your First Home Scheme Explained: Deposit, Equity Loan, Price Caps and Monthly Costs

Your First Home is a new government scheme that lets first-time buyers in England buy a new-build home with a deposit of 2.5% of the price. It was confirmed in the Budget on 28 October 2026, and GOV.UK has since published guidance and a full list of local price caps. Here is how the scheme fits together, what it could mean each month, and the dates to watch.

How Your First Home works

The purchase is funded from three parts:

• Your deposit: at least 2.5% of the purchase price.
• A government equity loan: 20% of the purchase price, interest-free for the first 5 years.
• A repayment mortgage: the rest, from a participating lender.

GOV.UK uses a £300,000 home as its example. The buyer puts in a £7,500 deposit, the equity loan covers £60,000 and the mortgage is £232,500. With a standard 95% mortgage on the same home, the deposit would be £15,000 and the mortgage £285,000. So the scheme halves the deposit and shrinks the mortgage by £52,500.

Who qualifies

According to GOV.UK, you need to:

• be a first-time buyer
• buy a new-build home in England, within the local price cap
• live in it as your main home
• have a total annual household income of £110,000 or less outside London, or £140,000 or less within London
• be able to get a repayment mortgage from a participating lender

Participating lenders carry out their usual affordability and credit checks. GOV.UK says the full eligibility rules will be published before applications open, so details such as how household income is measured are still to come.

Price caps by local authority

Each local authority area has its own maximum purchase price. The full list was published on GOV.UK on 3 November 2026. A few examples from that list:

• Camden, Westminster and the other highest cap boroughs: £650,000
• Barnet, Bromley and Croydon: £500,000
• Manchester: £355,000
• Bristol: £325,000
• Birmingham: £315,000
• Cornwall: £310,000
• Leeds: £305,000
• Newcastle upon Tyne: £265,000
• Liverpool: £235,000
• North Lincolnshire, the lowest cap on the list: £215,000

Check the GOV.UK list for your own area before you start viewing homes, because the cap sets the ceiling on what you can buy through the scheme.

Equity loan interest: the fee schedule

The equity loan carries no interest for the first 5 years. After that, GOV.UK sets out this schedule:

• Years 1 to 5: 0%
• Year 6: 1.5%
• From year 7: 3%

Interest is paid separately from your mortgage, and it does not reduce the amount of equity loan you owe. GOV.UK says more information on how interest payments will be collected will be published before applications open.

A worked monthly payment example

Take the £300,000 home again, with a 30-year repayment mortgage at 5%. The 5% rate is the illustrative rate GOV.UK uses, not a quoted deal.

• Your First Home mortgage of £232,500: £1,248 a month
• Standard 95% mortgage of £285,000: £1,530 a month

That is £282 a month less on the mortgage. Adding the equity loan interest on £60,000 gives the total monthly cost under the scheme:

• Years 1 to 5: £1,248 (no equity loan interest)
• Year 6: £1,248 plus £75 interest, so £1,323
• From year 7: £1,248 plus £150 interest, so £1,398

Even from year 7, the total in this example is £132 a month below the standard 95% mortgage. These figures leave out mortgage fees, insurance, council tax, service charges, estate charges and maintenance.

Repaying the equity loan

The equity loan is linked to the value of your home, not to the amount you borrowed. You normally repay 20% of the home's value at the time, based on an independent valuation. On GOV.UK's example, if the £300,000 home rises to £320,000 you would repay £64,000. If it falls to £280,000 you would repay £56,000.

It is normally repaid when you sell, and you can repay some or all of it earlier. Minimum repayment amounts, valuation requirements, fees, and the rules for selling or remortgaging will be published before applications open.

Stamp duty on a Your First Home purchase

The scheme guidance does not change stamp duty. Under the current first-time buyer relief on GOV.UK, there is no Stamp Duty Land Tax on the first £300,000, then 5% on the portion from £300,001 to £500,000, and the relief is not available above £500,000. On the £300,000 example that means no stamp duty. On a £355,000 new build in Manchester it would be £2,750. For your own tax position, speak to a qualified UK tax adviser.

Key dates (checked 4 November 2026)

GOV.UK gives this timeline:

• By the end of December 2026: customer pre-registration opens, guidance is published and the first developers register
• February 2027: first customer applications
• April 2027: first property sales under the scheme

The government has committed £4.7 billion over 5 years. We will update this section as GOV.UK publishes the full rules and opens pre-registration.

Run your own numbers in Stresst

The free Mortgage Payment calculator works out your monthly repayment: enter the full price as the property value and your mortgage as the loan amount, for example £300,000 and £232,500. The free Stamp Duty and Total Purchase Costs calculators show your stamp duty and cash needed to buy; Stresst does not model the equity loan itself, so add any equity loan interest on top.

Download Stresst free on Google Play

On iPhone, Stresst is in beta through Apple's TestFlight app.

Join the Stresst iPhone beta on TestFlight

Know your numbers before you commit.

Sources

• Ministry of Housing, Communities and Local Government (GOV.UK), Your First Home, https://www.gov.uk/government/publications/your-first-home/your-first-home, checked 4 November 2026
• Ministry of Housing, Communities and Local Government (GOV.UK), Your First Home: local authority property price caps, https://www.gov.uk/government/publications/your-first-home/your-first-home-local-authority-property-price-caps, checked 4 November 2026
• GOV.UK, Stamp Duty Land Tax: residential property rates, https://www.gov.uk/stamp-duty-land-tax/residential-property-rates, checked 4 November 2026