The Government announced a new equity loan scheme for England called Your First Home on 26 September 2026, which is intended to help eligible first time buyers purchase qualifying newbuild homes. The scheme could make buying a home more accessible by reducing the amount of money buyers need to save for a deposit.
Following today’s Budget (28 October 2026) some further information has been provided, however, some of the important details have not yet been confirmed.
Here is what we know so far and what you should consider if you are considering buying a home using the Scheme, which is set to open for pre-registration in December 2026 and full applications in February 2027.
How Will Your First Home Work?
Key information was announced at the Budget on 28th October 2026. Currently, under the proposed scheme, we know:
- You will need a 2.5% deposit.
- The maximum deposit will be at 15%.
- Up to 20% of the purchase price will be provided by the Your First Home equity loan.
- The equity loans will have a five-year interest free period, with a gradual increase after this period.
- There will be a household income cap. These income caps will be set at £110,000 per household outside of London and £140,000 inside of London.
- There will be local property price caps. The property price caps will be set at £500,000 outside of London and £600,000 inside.
- The scheme is expected to apply to qualifying new-build homes purchased from participating developers.
- The first loans under the scheme are expected to be issued from April 2027.
What is an Equity Loan?
An equity loan is not the same as a grant or free money towards your home. The Government backed loan will be secured against the property.
This means that you will have your standard mortgage, as well as the equity loan. One of the most important things to understand will be how much you will eventually have to repay. The Government has not yet confirmed the repayment requirements for Your First Home. Depending on the final rules, the amount you repay could potentially be affected by the value of your property when the loan is repaid. For example, an increase in the value of your home could mean that the amount you repay is greater than the amount originally provided.
What Happens When You Want to Sell or Remortgage?
It is important to understand what the scheme could mean further down the line. The further guidance is expected to explain what happens if you:
- sell your home;
- remortgage;
- want to repay some or all of the equity loan;
- transfer the property into someone else’s name;
- experience a change in your circumstances; or
- want to make another change to the mortgage or property.
There may also be valuation requirements and specific procedures to follow. These details have not yet been published.
Your conveyancer will explain the legal aspects once the scheme rules are available. If you need advice as to whether borrowing through an equity loan is financially suitable for you, you should also speak to an appropriately qualified mortgage or financial advisor.
Your Mortgage Still Matters
Your First Home will not replace your mortgage. You will still need to obtain mortgage finance for the remainder of the purchase price, subject to the lender’s requirements. The Government has not yet published the full list of participating lenders nor their requirements. You should, therefore, not assume that every mortgage lender will accept the Scheme. Your mortgage adviser should check that your proposed lender and the equity loan can work together before you commit to the purchase.
Be Careful Before Paying a Reservation Fee
If you are buying a newbuild property, you may be asked to pay a reservation fee to the developer. You should be careful if you are relying on Your First Home to complete the purchase.
Before paying a reservation fee, you should establish:
- whether the property is intended to qualify for the scheme;
- whether the developer is participating;
- whether you are likely to meet the eligibility requirements;
- whether your proposed mortgage lender will accept the scheme; and
- what happens to your reservation fee if the purchase cannot proceed because you or the property do not ultimately qualify.
ISA Changes for First Time Buyers
The October 2026 Budget also contained further changes that may affect first time buyers:
- Lifetime ISA’s are to be replaced with the new First Time Buyer ISA from April 2029
- From 29 October 2026, Lifetime ISA funds can be withdrawn for purchases over the £450,000 property price cap with a reduced withdrawal charge of 20%
What Happens Next?
Further information and guidance about Your First Home is expected to be released prior to full applications opening in February 2027. Until the full rules and documentation are published, there will inevitably be some unanswered questions. If you are a first-time buyer considering a newbuild property and you think Your First Home could help you, it is important not to make assumptions about your eligibility or the terms of the Scheme until the official details are available.
Once the scheme is fully launched, your conveyancer should be able to guide you through the legal process and explain what the scheme means for your purchase.
How Dunn & Baker Solicitors Can Help You
Please do not hesitate to contact us with any queries you might have regarding the above.
Call us on:
Exeter 01392 285000
Cullompton 01884 33818
Or via our contact form: https://www.dunnandbaker.co.uk/contact/