Government Confirms 'Your First Home' Equity Loan Scheme for England, With a 2.5% Deposit and 20% State Loan to Be Detailed at the Budget

The government has set out plans for a new equity loan scheme intended to help first-time buyers in England onto the housing ladder, reviving a model similar to the former Help to Buy programme. The headline terms are eye-catching, but the detail that will determine the scheme's reach has been held back until the Budget, leaving buyers, housebuilders and the wider market waiting on the fine print. ## What has been announced

The announcement was made at the end of September, framed as a response to the deposit barrier facing would-be first-time buyers. The government announced on Saturday 26 September 2026 that a new equity loan scheme, Your First Home, in England will be confirmed at next month's Budget, to support more people into homeownership.

The scheme works on a familiar structure. On 26 September 2026 the government announced Your First Home, a scheme letting first-time buyers in England buy a new-build home with a 2.5% deposit and a government-backed equity loan of up to 20%. The scheme combines a 2.5% deposit, a 20% government equity loan and a mortgage covering the remaining 77.5%, with the equity loan having an initial interest-free period whose length has not yet been announced.

Crucially, this is a proposal rather than an open scheme. The scheme has not yet fully launched, and important details, including eligibility requirements, property price limits, costs and the implementation timetable, are due to be confirmed at the Budget.

The Your First Home scheme will help tackle the deposit barrier for first-time buyers who would be unable to afford their first home otherwise.

Ministry of Housing, Communities and Local Government, 2026

Who it is aimed at, and the caps to watch

The government has been explicit that support will be targeted rather than universal. The scheme will also set a household income cap with local property price caps to further ensure support is targeted at those who need it, the detail of which will be set out at Budget.

The scheme is confined to the new-build sector and to developers who opt in. Your First Home lets first-time buyers in England buy a new build with a 2.5% deposit and a government-backed equity loan of up to 20% that starts interest-free, and because the scheme only covers new builds, a buyer cannot use it to buy an existing home. It also does not extend across the UK. The scheme does not apply in Wales, but Help to Buy Wales is open until 31 March 2027.

• • Deposit: expected to be 2.5% of the purchase price.
• • Government equity loan: up to 20% of the purchase price, with an initial interest-free period.
• • Eligibility: first-time buyers only, subject to a household income cap and local property price caps.
• • Scope: new-build homes in England from participating developers only.

Why now: a stimulus for a strained new-build market

The timing reflects pressure on housebuilding. MHCLG said the scheme would act as a stimulus for the new-build market, which is currently facing challenging headwinds driven by international economic pressures and rising construction costs, and developers signing up will be expected to make a financial contribution towards its costs.

The announcement drew a broadly positive response from the industry. The National House Building Council welcomed the announcement, with chief executive Paul Turner calling the new equity loan scheme a welcome boost for the industry. He added a note of caution on supply. Turner cautioned that supply also needed to be addressed through accelerated planning reform and the easing of unnecessary regulatory burdens, adding that it was vital to keep focus on maintaining quality in the construction of new homes.

Markets reacted quickly. Shares in several of Britain's biggest housebuilders climbed sharply after the government set out the new scheme aimed at cutting the deposit needed for new-build homes.

The open questions

Not everyone is convinced the design will deliver affordability gains rather than price pressure. The announcement has already raised questions, with critics fearing another demand-side intervention could push up new-build prices. Analysts have drawn the obvious comparison. The structure inevitably draws comparisons with Help to Buy, which also used government equity loans to support new-build purchases.

Ultimately the scheme's impact will rest on the thresholds. The next stage will be shaped by the rules announced in the October Budget, and the balance between buyer support, property price limits and developer contributions will determine how accessible the programme is across different parts of England.

Your First Home signals a return to equity loan support for the new-build sector after a gap of several years, but the announcement raises as many questions as it answers. Until the income caps, local price caps, the interest-free period and the launch date are confirmed at the Budget on 28 October, its true reach across England's very different regional markets will remain uncertain. Silkwood Group will review the detail once the Budget rules are published and consider what they mean for the new-build landscape.

Sources

• • GOV.UK (MHCLG): New first-time buyer scheme to be confirmed at Budget
• • Housing Digital: Government confirms 'Your First Home' scheme
• • Property Industry Eye: Industry warns of risks after government unveils 2.5% deposit scheme
• • Setfords: Your First Home, what is the government's new first-time buyer scheme?