Equity Loan Scheme Guide

How the Your First Home scheme works

Last checked 28 September 2026

Your First Home is a government equity loan for first-time buyers of new-build homes in England. You pay a small deposit, the government lends a fifth of the price, and a mortgage covers the rest. Here's how the pieces fit together, as far as they've been announced.

Independent guide. We are not the government, Homes England, a housebuilder or a lender, and this is not an official site for the scheme. Everything here is general information to help you understand it, not financial advice. The scheme's rules are due at the Budget on 28 October 2026.

The three parts of the price

Every purchase through the scheme splits the price three ways (GOV.UK, HomeOwners Alliance):

  1. Your deposit: at least 2.5%. On a £230,000 home that's £5,750.
  2. The equity loan: 20%. Lent by the government, interest-free at first. On a £230,000 home that's £46,000.
  3. Your mortgage: the other 77.5%. From an ordinary lender, repaid monthly as usual. On a £230,000 home that's £178,250.

The government's example compares this with a 95% mortgage (a 5% deposit and no equity loan). Its announcement says buyers "could save hundreds of pounds per month" that way, because the mortgage is smaller. Our calculator shows the difference for any price and rate.

What an equity loan is

An equity loan is a loan secured against your home where what you owe is a share of the home's value rather than a fixed amount. If you borrow 20% of the price, you owe 20% of whatever the home is worth when you repay. That's how Help to Buy, the previous scheme, worked: you repaid your equity loan percentage of the home's market value at the time (GOV.UK).

So an equity loan behaves a little like the government owning part of the gain, or sharing part of the loss:

£230,000 home, 20% equity loanHome worth when you repayYou repay
Prices fall 10%£207,000£41,400
Prices unchanged£230,000£46,000
Prices rise 10%£253,000£50,600
Prices rise 30%£299,000£59,800

Illustration, assuming repayment works as it did under Help to Buy. The new scheme's repayment rules haven't been published.

What it costs while you have it

The government says the loan will have "an initial interest-free period" (GOV.UK). It hasn't said how long that is, or what you'd pay afterwards. Some reports say five years (Global Banking & Finance Review), but that isn't in the government's announcement.

For comparison, Help to Buy loans were interest-free for five years. In year 6 you paid interest of 1.75% a year on the amount you originally borrowed, and the rate went up every April after that. You also paid a £1 monthly management fee, and none of the interest or fees reduced the loan itself (GOV.UK). On a £46,000 loan, 1.75% a year is about £67 a month.

Rules not confirmed yet. The length of the interest-free period, and any interest or fees after it, have not been announced. The government says the full details will be set out at the Budget on 28 October 2026. We'll update this page when they are.

When you pay it back

Under Help to Buy you had to repay the whole loan when you sold the home, at the end of the loan term (usually 25 years), when you paid off your mortgage, or if you broke the terms. You could also repay part of it early, in chunks of at least 10% of the home's value (GOV.UK). One report says the new scheme's loan is repaid on sale, within 25 years, or in line with the main mortgage (Global Banking & Finance Review), but the government hasn't published repayment terms. Our repayment guide goes through how it worked.

Who it's for

The announcement says it's for first-time buyers in England buying a new-build home from a developer signed up to the scheme, with a household income cap and local price caps still to be set (GOV.UK). The Prime Minister, Andy Burnham, said it is aimed at people struggling with the cost of housing, and coverage described it as targeted at buyers without help from the "bank of mum and dad" (LBC). More on the eligibility page.

Where the money comes from

Developers who sign up are expected to contribute towards the costs (GOV.UK). LBC reported that the rest comes from reprioritised government budgets (LBC). The total cost and how many buyers it's meant to help are due at the Budget.

The risks people have raised

Scotland, Wales and Northern Ireland

The scheme is for England (GOV.UK). Wales runs its own Help to Buy - Wales equity loan, with applications to be submitted by 31 March 2027 (Help to Buy - Wales (GOV.WALES)). Scotland has its own shared equity schemes (Open Market Shared Equity (mygov.scot)).

Related guides

Sources