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Your First Home: the new 20% equity loan for first-time buyers in England, and the Lifetime ISA change

The Budget confirmed a scheme for new-build homes with deposits from 2.5%, starting April 2027. Lifetime ISA rules also changed from today.

Published 29 October 2026Last checked 29 October 2026EnglandFrom HM Treasury

A small wooden model house on a table beside a neat stack of coins and a building plan held down by a pencil, lit by a window.

Illustration generated with AI

What's happening

The Budget on 28 October 2026 confirmed £4.7 billion for Your First Home, a new scheme in England that lends first-time buyers 20% of the price of a new-build home. Buyers could put down a deposit as low as 2.5%, and the first loans are due to complete from April 2027. The same day, the charge for using a Lifetime ISA on a home over £450,000 fell from 25% to 20%, and a new First Time Buyer ISA was confirmed for April 2029.

The question: How will the Your First Home equity loan work, who can use it, and what changed for Lifetime ISA savers?

The policy

Announced by
HM Treasury and the Ministry of Housing, Communities and Local Government
Announced on
2026-10-28
Stage
announced
Takes effect
First loans complete from April 2027. Lifetime ISA change from 29 October 2026. First Time Buyer ISA from 6 April 2029.
  • First-time buyer, £250,000 new-build in England: Deposit from £6,250, equity loan £50,000, mortgage £193,750.

    £250,000 × 2.5% = £6,250; × 20% = £50,000; remainder £193,750 (illustrative calc)

  • Lifetime ISA saver buying a £480,000 first home: Can now withdraw with a 20% charge instead of 25%.
  • Saver starting out in 2029: Can open a First Time Buyer ISA, save up to £4,000 a year and get a 25% bonus, up to £20,000 in bonus overall.

This applies to you if…

  • You have never owned a home
  • You want to buy a new-build home in England from a developer in the scheme
  • Your household income and the home's price are under the caps, which the government has not yet published
  • You can get a mortgage for the rest of the price

Not for you if…

  • People buying an older (not new-build) home
  • Buyers in Scotland, Wales or Northern Ireland. The scheme is for England
  • People who already own, or have owned, a home

What it's worth

What it's worth: A loan of 20% of the price. On a £250,000 home that is £50,000 (illustrative calc)

The government lends 20% of the price as an equity loan, with an initial interest-free period. The buyer needs a deposit of at least 2.5% and a mortgage for the rest. Price and income caps will apply.

How a £250,000 new-build home could be paid for

  1. Deposit at 2.5%: £250,000 × 2.5% = £6,250.
  2. Equity loan at 20%: £250,000 × 20% = £50,000.
  3. Mortgage for the rest: £250,000 − £6,250 − £50,000 = £193,750.

A mortgage of £193,750, which is 77.5% of the price

Illustrative calc using the 2.5% and 20% figures in the Budget costings. The home would need to be under the local price cap, which is not yet published.

How to do it

  1. 1

    Wait for the full rules

    The government says it will set out final details, including the price and income caps. Developers taking part must sign up and pay a fee.

  2. 2

    Keep saving for a deposit

    You need at least 2.5% of the price, plus money for legal fees, surveys and moving.

  3. 3

    If you have a Lifetime ISA, check the price cap

    Lifetime ISA money used on a first home up to £450,000 keeps the 25% bonus. Above £450,000, the withdrawal charge is now 20% instead of 25%. The GOV.UK withdrawal page had not been updated when we checked.

  4. 4

    Look for participating developers and lenders once the scheme opens

    The first loans are due to complete from April 2027.

Deadline

First loans due to complete from April 2027 — 1 April 2027 (in 154 days)

The opening date for applications has not been published on GOV.UK.

The catches

You owe a share of the home's value

With an equity loan the amount you repay is a share of the home's value when you repay, so it can go up or down with house prices.

Interest-free only at first

The government says there is an initial interest-free period. It has not yet published how long it lasts or what you pay afterwards.

New-builds only

Only homes from developers in the scheme count.

A small deposit means a big mortgage

With a 2.5% deposit, any fall in prices could leave you owing more than the home is worth.

Illustrative example

Jo and Alex, renting in the Midlands

Jo and Alex have saved £8,000 and want a two-bedroom new-build house.

  1. They find a £240,000 home from a developer that plans to join the scheme.
  2. A 2.5% deposit is £6,000. The equity loan is 20%, which is £48,000.
  3. They would need a mortgage of £186,000.
  4. Their £8,000 covers the deposit with £2,000 left for fees.

They could buy with a 2.5% deposit, if the home and their income fall under the caps once published and a lender offers them a mortgage.

Illustrative example. Caps, interest terms and lender rules are not yet published.

What this means for…

  • Renting: If you rent in England and want a new-build home, this could cut the deposit you need to 2.5%.
  • Living with family: If you live with family and are saving for a deposit, a Lifetime ISA adds a 25% bonus on money used for a first home up to £450,000.
  • 25–54: The new First Time Buyer ISA, due from April 2029, needs you to be 18 or over, with no upper age limit.

Common misreadings

You might hear: It's open now.

Actually: The scheme has been confirmed, but the first loans complete from April 2027 and full details are still to come.

You might hear: I can use it on any home.

Actually: It is for new-build homes in England, bought by first-time buyers, under price and income caps.

You might hear: The Lifetime ISA penalty for homes over £450,000 has been scrapped.

Actually: It has been reduced. From 29 October 2026 the charge is 20% instead of 25%. The 25% bonus still only applies to homes up to £450,000.

Where the UK nations differ

England
Your First Home is an England scheme.
Scotland, Wales and Northern Ireland
Your First Home does not apply. The Lifetime ISA and First Time Buyer ISA changes come from HM Treasury, which runs ISAs.

What you could do

  1. are a first-time buyer in England looking at new-build homes

    Watch for the price and income caps and the list of developers before you commit to a purchase.

  2. have a Lifetime ISA and are buying a first home over £450,000

    Check the cost of the new 20% withdrawal charge, which applies from 29 October 2026, and ask your Lifetime ISA provider how it works.

  3. are saving for a first home

    Read the First Time Buyer ISA plans, due from April 2029, before choosing where to save.

Timeline

  1. 28 October 2026

    Budget confirms the scheme

    £4.7 billion for around 70,000 households.

  2. 29 October 2026

    Lifetime ISA charge cut

    Charge for homes over £450,000 falls from 25% to 20%.

  3. 1 April 2027

    First Your First Home loans

    First loans due to complete from April 2027.

  4. 6 April 2029

    First Time Buyer ISA starts

    Replaces the Lifetime ISA for new savers.

The detail

The rules

  • Equity loans of 20% for first-time buyers purchasing new-build homes (Budget policy costings, item 38).
  • Deposits as low as 2.5%. Price and income caps will apply. Developers will pay a fee.
  • First Time Buyer ISA: contributions up to £4,000 a year, 25% bonus, maximum bonus £20,000, £450,000 price cap, must be 18 or over, account held one year before the bonus (government response, paras 2.4 and 2.8).
  • Existing Lifetime ISAs carry on under current terms. From 29 October 2026 Lifetime ISA money used on a first home over £450,000 has a 20% charge.

References

  • Budget 2026 policy costings, item 38: Your First Home terms and timing
  • Policy costings, items 39 and 40: First Time Buyer ISA and Lifetime ISA charge
  • First Time Buyer ISA government response, chapter 2: How the new ISA will work

Documents

Words explained

Equity loan
A loan for part of a home's price, repaid as a share of the home's value.
New-build
A newly built home sold by the developer.
Lifetime ISA
A savings account for first homes or retirement, with a 25% government bonus.
Withdrawal charge
A fee for taking Lifetime ISA money out for anything other than an eligible home or retirement.
Price cap
The highest home price allowed under a scheme.

In short

Your First Home will lend first-time buyers in England 20% of the price of a new-build home, with deposits from 2.5%. The first loans are due from April 2027, and caps are still to come. Lifetime ISA money on homes over £450,000 now costs 20% to withdraw, and a First Time Buyer ISA starts in 2029.

Related dates

  • 5 Nov Bank of England interest rate decisionDecision · in 7 days
  • 17 Dec Bank of England interest rate decisionDecision · in 49 days
  • 4 Feb Bank of England interest rate decisionDecision · in 98 days
  • 18 Mar Bank of England interest rate decisionDecision · in 140 days
  • 1 Apr Your First Home: first equity loans dueChange · in 154 days
  • 29 Apr Bank of England interest rate decisionDecision · in 182 days
See the money calendar

Sources

  1. Budget 2026, HM Treasury (2026-10-28)
  2. Budget 2026 policy costings, HM Treasury (2026-10-28)
  3. First Time Buyer ISA consultation: government response, HM Treasury (2026-10-28)
  4. First Time Buyer ISA consultation, HM Treasury
  5. New first-time buyer scheme to be confirmed at Budget, MHCLG (2026-09-26)
  6. Lifetime ISA, GOV.UK
  7. Your First Home scheme (news pointer), MoneySavingExpert (2026-10-28)

This is guidance, not regulated financial advice. Check figures against the linked official source before you act. Written with AI assistance and checked against primary sources. How Kitty works. For free, impartial help, try MoneyHelper or Citizens Advice.