First-time buyers in England could purchase a newly built home worth £450,000 with a deposit of just £11,250 under a new Government scheme scheduled to open in February 2027.
The Your First Home scheme will allow eligible buyers to put down a minimum deposit of 2.5% of the property’s purchase price, with the Government providing an equity loan worth 20%.
The remaining 77.5% would be covered by a repayment mortgage from a participating lender.
The scheme is intended to help people who can afford monthly mortgage repayments but struggle to save the larger deposits traditionally required to buy a property.
However, the smaller deposit does not mean the home will be cheaper overall. Buyers will still need to qualify for a substantial mortgage and eventually repay the Government’s equity loan, which is linked to the property’s value.
How the £450,000 home purchase would work
Under the scheme, a qualifying buyer purchasing a new-build property for £450,000 could arrange the purchase as follows:
| Source of funding | Amount |
|---|---|
| Buyer’s deposit (2.5%) | £11,250 |
| Government equity loan (20%) | £90,000 |
| Mortgage (77.5%) | £348,750 |
| Total purchase price | £450,000 |
The Government’s contribution would reduce the amount the buyer needs to borrow from a mortgage lender.
For comparison, a conventional 95% mortgage on the same property would require a £22,500 deposit and a mortgage of £427,500.
The Your First Home arrangement therefore reduces the initial deposit requirement by £11,250 and the mortgage borrowing by £78,750.
Buyers will own their property from completion. The Government will not become their joint owner or landlord, although it will retain an equity interest that determines how much must eventually be repaid.
What would the monthly mortgage payment be?
Using an illustrative mortgage rate of 5% over 30 years, a repayment mortgage of £348,750 would cost approximately £1,872 per month.
That calculation covers the mortgage only. It does not include the interest that becomes payable on the Government’s equity loan after the initial five-year period.
The Government’s published interest arrangements are:
| Period | Equity loan interest rate | Monthly interest on £90,000 |
|---|---|---|
| Years 1–5 | 0% | £0 |
| Year 6 | 1.5% | £112.50 |
| From year 7 | 3% | £225 |
These are illustrative calculations using the original £90,000 equity loan. Interest payments are separate from the mortgage and do not reduce the amount of equity loan outstanding.
The actual mortgage rate available to a buyer will depend on the participating lender, the applicant’s financial circumstances and the mortgage product offered.
The Government loan is not free money
One of the most important features of Your First Home is that the Government’s 20% contribution is linked to the future value of the property.
This means buyers do not simply repay the original £90,000 if the property changes in value.
For example, if a buyer purchases a home for £450,000 and its value later increases to £500,000, the Government’s 20% share would become £100,000.
| Property value | Government’s 20% share |
|---|---|
| Original purchase: £450,000 | £90,000 |
| Later value: £500,000 | £100,000 |
| Later value: £400,000 | £80,000 |
If the property loses value, the amount repayable can also decrease.
The Government therefore shares in changes in the property’s value. Buyers will normally repay the equity loan when they sell, although partial or full repayment before selling will also be possible under the scheme’s rules.
An independent property valuation may be required when calculating the amount to be repaid.
Who can qualify for Your First Home?
The scheme is restricted to eligible first-time buyers purchasing new-build properties in England.
The main published requirements include:
- Buyers must be purchasing their first home.
- The property must be a qualifying new-build in England.
- The home must be used as the buyer’s main residence.
- The purchase price must fall within the relevant local authority price cap.
- Household income must not exceed £110,000 outside London or £140,000 within London.
- Buyers must obtain a repayment mortgage from a participating lender.
- Applicants must pass the lender’s affordability and credit checks.
The minimum deposit is 2.5%, while the maximum deposit permitted under the scheme is 15%.
Having enough money for the minimum deposit does not automatically mean an applicant will qualify. A lender will still assess earnings, existing debts, household spending and the ability to meet mortgage repayments.
Not every £450,000 property will qualify
Although the scheme allows eligible buyers to purchase properties up to their applicable local price limit, the limits differ between local authority areas.
This is particularly important for anyone considering a £450,000 home.
For example, the published price cap for Birmingham is £315,000, meaning a property costing £450,000 would be above the scheme limit there.
In Basildon, the cap is £460,000, while the limit for Camden is £650,000.
The price of a property alone is therefore not enough to establish eligibility. Buyers must check the specific limit applying to the local authority where the home is located.
The Government says the limits are intended to direct assistance towards homes considered more appropriate for first-time buyers in different housing markets.
Buyers must also budget for stamp duty and other costs
The deposit is only one part of the money needed to complete a property purchase.
For an eligible first-time buyer purchasing a £450,000 home in England, stamp duty would be £7,500 under the current first-time buyer relief rules.
Other expenses can include:
- Solicitor and conveyancing fees.
- Property searches.
- Survey and valuation costs, where applicable.
- Mortgage arrangement and other lender fees.
- Moving expenses.
- Insurance and initial household costs.
Allowing approximately £3,000 to £5,000 for legal, survey, mortgage and moving expenses would bring the estimated upfront savings requirement to between £21,750 and £23,750.
This includes the £11,250 deposit, £7,500 stamp duty and the estimated additional expenses.
The amount will vary depending on the property, solicitor, mortgage product and other services used. Buyers should also retain an emergency fund rather than committing all their available savings to the purchase.
When will the Your First Home scheme open?
The Government expects the scheme to open for customer applications in February 2027.
The published timetable is:
- By the end of December 2026: customer pre-registration and further guidance are expected.
- February 2027: applications are expected to open.
- April 2027: the first property sales under the scheme are expected.
Pre-registration will not commit a buyer to purchasing a property through the scheme.
The Government has committed £4.7 billion in funding over five years. It expects the programme to support approximately 70,000 first-time buyer households and contribute to the delivery of around 20,000 new homes.
The scheme will work with participating developers and mortgage lenders. Not every new-build property or developer will automatically be included.
Could the scheme make buying a home more affordable?
Your First Home could help some first-time buyers overcome the deposit barrier, particularly households that have sufficient income to support mortgage repayments but have struggled to save a larger deposit.
The £450,000 example illustrates how a 2.5% deposit could reduce the initial amount a buyer needs to save.
However, the scheme does not remove the affordability challenge. A mortgage of £348,750 still requires a substantial monthly commitment, while the Government’s equity loan creates a separate financial obligation that can increase if the property’s value rises.
Buyers will need to consider what happens after the five-year interest-free period, how they might repay the equity loan and whether they could afford their mortgage if interest rates changed.
The scheme may make it easier for some households to purchase a new-build home, but the long-term cost will depend on the mortgage terms, the property’s future value and the timing of equity loan repayment.
For prospective first-time buyers, the key question is not simply how little they need to put down at the beginning. It is whether they can comfortably afford the mortgage, additional charges and eventual repayment of the Government’s share.
