England’s £4.7bn scheme offers first-time buyers loans for new builds
The government has set out how its £4.7bn Your First Home scheme will help first-time buyers in England purchase new-build homes. It is intended to make buying more affordable for people without family help, with the government saying buyers could save hundreds of pounds a month.
Eligible buyers using a participating developer can borrow 20% of the purchase price through an equity loan, interest-free for five years, and put down a deposit of 2.5% to 15%. Household income limits are £110,000 outside London and £140,000 in London, with local price caps; announced examples include £650,000 for inner London and £220,000 for Middlesbrough. Interest on the loan rises to 1.5% in year six and 3% from year seven, while the amount repaid is linked to the home’s value. Pre-registration is expected by the end of December, applications from February 2027 and first loans from April 2027.
In short
- £4.7bn scheme targets 70,000 first-time buyers in England.
- Buyers can borrow 20% of a new-build home’s price.
- The equity loan is interest-free for five years.
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The case for
Supporters can argue the scheme gives first-time buyers without family wealth a route into home ownership by reducing the deposit and mortgage they need, while its income and local price limits direct help towards people the policy is meant to serve. By supporting purchases of new-build homes, it may also help demand for new housing and offer buyers lower payments in the early years.
The case against
Critics can argue that an equity loan tied to the home’s future value may leave buyers with a larger repayment if prices rise, while interest charges begin after five years and increase thereafter. Because the scheme applies to participating new-build homes, it may steer buyers towards a limited part of the market, and subsidising demand could do less to address affordability than increasing the supply of homes.
Explained simply
Buying a home in England usually involves a deposit and a mortgage from a bank or building society. First-time buyers can find it hard to save a large deposit, and people without help from family may have fewer ways to meet the upfront cost.
An equity loan is money borrowed towards the home’s price, alongside the buyer’s own deposit and mortgage. The government has used this approach in earlier schemes, while housebuilders create new-build homes and may take part in the new scheme. The loan’s cost and repayment terms can affect what buyers owe over time.
The scheme applies in England, where housing policy is set separately from that in Scotland, Wales and Northern Ireland. Income and local price limits mean eligibility can depend on where someone wants to buy and their household earnings.
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Originally published by The Guardian as “What you need to know about Your First Home scheme for first-time buyers”.