Your First Home Brings Help to Buy Back at 2.5%

Prime Minister Andy Burnham announced Your First Home on 26 September 2026, a 2.5% deposit equity loan for first-time buyers of new-builds in England. The state would add a 20% loan, with an early spell of zero interest, and Chancellor John Healey is due to set the remaining rules at the Budget on 28 October 2026.

The Ministry of Housing, Communities and Local Government published its evaluation of Help to Buy on 16 September 2026, ten days earlier. That scheme used the same basic machine from 2013 to 2023: an equity loan on a new home, a small cash deposit, and a bet that extra demand would pull more houses out of the ground.

Help to Buy Returns as Your First Home

Burnham said too many young people were struggling with the cost of housing, “with many giving up hope of ever having a home to call their own.” He said the government would “step in to help more first-time buyers on to the housing ladder,” and he pointed the product at people who cannot call on the Bank of Mum and Dad.

The ministry said the loan would be open to first-time buyers in England who put down 2.5% and buy a new-build from a developer signed up to the scheme. People would then take a mortgage for the remaining 77.5%. An income cap and local price caps are promised so the help does not go to high earners with large savings pots, but those numbers have not been published.

Money would come from existing budgets, and developers would pay towards running costs when they join. Jennie Daly, chief executive of Taylor Wimpey, said her firm welcomed the government “taking action and recognising the significant challenges facing both first-time buyers and the housing industry.” Pre-registration is expected by the end of 2026. Ministers have not said whether there will be an age limit.

WHAT WE KNOW

• The product: A 2.5% cash deposit plus a 20% government equity loan on a new-build in England, with an early interest-free spell on that loan.
• The timing: Announced on 26 September 2026, with remaining rules due at the 28 October Budget and sign-up expected by the end of 2026.
• The bill: Officials say the loan will be paid for by moving money inside current budgets, and that builders who join will contribute to costs.

WHAT IS UNCONFIRMED

• The caps: Household income limits and local property price caps have been promised, with no figures attached.
• The free period: How long the equity loan stays interest-free, and what rate follows, has not been set out.
• The Treasury cost: No price tag has been published for the loan book or for the developer fee.

On the last scheme, interest was waived for five years and then charged at 1.75% in year six on the original loan, under government repayment rules that still apply to those older loans. Your First Home only promises an “initial” free spell. Anyone treating the new product as a carbon copy of 2013 is guessing.

A 5% Deposit Still Costs About £16,850

The UK House Price Index put the average UK home at £273,000 in July 2026, up 1.4% on a year earlier, or £4,000. A 5% slice of that average is £13,650 before a solicitor, a survey or a van. Moneyfacts, a financial information service, puts a 5% deposit plus moving costs and legal fees at about £16,850.

First-time buyers do not buy the average home. Across Great Britain the first-time buyer average in July 2026 was £229,302. A 2.5% deposit on that figure is about £5,730, with a 20% loan of about £45,860. That is the cash cut the new scheme is selling. It is still a four-figure sum for someone paying today’s rents, and it only works on a new-build that a signed-up developer is willing to sell.

CASH NEEDED ON THREE PRICES

Those scheme deposits are not what buyers actually put down when they get a mortgage today. L&C Mortgages, looking at applications from January to August 2026, found an average first-time buyer deposit of £69,523 on a £305,000 purchase, with an average age of 33. The firm said it would take about 16.5 years to build a typical deposit by saving £250 a month at 4% interest.

Santander’s own first-time buyers tell the same story from the other end of the market. David Morris, the bank’s head of homes, said last year’s average first-time buyer with the lender put down a deposit of more than £85,000. A Nationwide Building Society survey found that more than half of parents who charge their adult children rent put some or all of that money towards a deposit. Your First Home is aimed at the people who cannot make that call.

What the 2013 Scheme Did to Prices

Help to Buy: Equity Loan opened on 1 April 2013 and took its last completions on 31 May 2023. Homes England figures show 387,195 properties were bought with those loans, including 328,346 by first-time buyers. The loans were worth £24.7 billion against homes valued at £109.2 billion.

The first version, running to 2021, was open to any buyer of a new-build under a £600,000 national cap, with the London loan raised to 40% from February 2016. The 2021 to 2023 version was limited to first-time buyers and used regional price caps. The core deal never changed. The state took a slice of the home, the buyer put down a little cash, and the builder got a customer who could complete.

HELP TO BUY IN ONE PAGE

Verian, Alma Economics and Sheffield Hallam University ran the evaluation for the ministry. They found the loan raised first-time buyer mortgage sales, though not in every part of England, and that around 15% of new builds in England from 2013 to 2023 were the result of the scheme. Along the England and Wales border, they attributed about 15% to 30% of first-time buyer mortgage sales on the English side to Help to Buy.

They also found half of customers said they could have bought a home without the scheme. Prices were about 2% higher on the English side of that border during the first version than they would have been on the Welsh path. The effect on ownership was weakest in places that were already hard to afford, which were also the places where prices rose most. In those markets the extra cash bid up the same scarce plots.

An equity loan is not a gift. If you buy at £100,000 with a 20% loan you owe £20,000, and if the home later sells for £120,000 you owe £24,000, because the state’s share moves with the price. Fall in value and the sum owed falls with it, but you still have a large mortgage on a new-build that can be harder to sell than a second-hand house. After the free years, interest and a management fee still have to be paid until the loan is cleared.

THE LOAN’S FIRST LIFE

1. 1 April 2013: Help to Buy: Equity Loan opens in England on new-builds, with a national price cap of £600,000.
2. February 2016: The London equity loan rises to 40% of the purchase price.
3. 2021: The second version limits the loan to first-time buyers and adds regional price caps.
4. 31 May 2023: Completions under the scheme end, after 387,195 purchases.
5. 16 September 2026: The ministry publishes the evaluation of those ten years.
6. 26 September 2026: Your First Home is announced as a 2.5% deposit loan on new-builds.
7. 28 October 2026: John Healey is due to set out the missing caps, costs and start dates at the Budget.

Independent economist Julian Jessop called the revival a return to a product that helps a small number of buyers while lifting prices for everyone else, and pointed at that deadweight finding. The evaluation is more careful than a slogan, and it still leaves a hard fact in the file: a large share of the last cohort did not need the loan to complete.

Lloyds Will Not Lend 98% on Those New-Builds

While ministers design a 2.5% path through a government loan, high-street lenders have been cutting cash another way, by stretching the mortgage. Those products are useful, and they often shut the door on the very homes Your First Home would buy.

Lloyds Banking Group said in May 2026 that it would become the first major UK bank to offer a minimum deposit of just £5,000, a 98% loan on homes worth up to £300,000. The five-year fix launched at 5.89% with no product fee, a 4.5 times income cap and terms up to 40 years, through Lloyds and Halifax and via brokers from 18 May. The group said it wanted about £500 million of extra first-time buyer lending over the following year. New-builds are out. Shared ownership is out. Money given by relatives does not count.

Amanda Bryden, who leads Halifax Intermediaries and Scottish Widows Bank, said the deal was for people who can meet monthly payments but cannot save a large lump without family help. That is the same group Burnham named. They still cannot use this 98% loan on a Your First Home plot, because the plot is a new-build.

LOW-CASH MORTGAGES ALREADY ON SALE

• Lloyds and Halifax: £5,000 minimum, 98% loan, homes up to £300,000, five-year fix launched at 5.89%, no gifted deposits and no new-builds.
• Santander My First Mortgage: £10,000 minimum, 98% loan, homes up to £500,000, launched on 3 February 2026, and not for new-builds or flats.
• Broker menu: David Hollingworth of L&C Mortgages points to other deals that start from £5,000 and go to 98% or 99% of the price.

The two “small deposit” machines therefore run on different houses. Your First Home needs a new-build from a developer who has paid to join. The 98% bank deals that actually cut the cash on a second-hand street often refuse that new-build. A buyer without parental help is being offered a ladder that only leans on one kind of wall.

New-builds also come with their own snagging lists, and the loan ties the buyer’s repayment to a price that can move. Restricting the scheme to those homes is how ministers hope to lift completions toward the 1.5 million target for this Parliament. It is also how they channel public credit into the part of the market where unsold stock and land banks hurt builders first.

A Frozen £450,000 Line Now Falls Below London Prices

For people still saving, the product that actually adds public money to a deposit is the Lifetime ISA. You can put in up to £4,000 a year, and MoneyHelper sets out the 25% bonus from the government, worth up to £1,000 a year. The bonus can be used on a first home costing up to £450,000, a cap that has not moved since 2017, or after age 60, or if you are terminally ill. Take the money out for anything else and a 25% charge applies, which can leave you with less than you paid in. You must be 18 to 39 to open one, and the account must be 12 months old before a home purchase.

That £450,000 line now sits below the market in the capital. The London first-time buyer average in July 2026 was £466,851. The all-property London average was £550,037, down 3.3% on the year. A saver who did everything the product asked can still be fined for buying the ordinary first home in the region where deposits hurt most.

More LISA holders have lost a part of their original savings than have used it to purchase a house.

HM Treasury, First Time Buyer ISA consultation

As of 2024/25, 314,600 savers had used a Lifetime ISA to buy a first home. Unauthorised withdrawal charges reached 8% of all accounts opened in that year. The Treasury is replacing the product with a First Time Buyer ISA, consulted on from 22 June to 18 August 2026. Existing Lifetime ISA holders can keep saving under the old rules until the new account exists. The new bonus would be paid only at purchase, with no exit charge if plans change, and with no upper age limit, which matches the rising age of first purchase.

HM Treasury has already written that more LISA holders have lost a part of what they put in than have used the account to buy a house. What it has not written is the new bonus rate, the new annual limit, or the new price cap. Those, the consultation says, will come at a future fiscal event. The 28 October Budget is the next one on the calendar.

Anna Bowes, a savings specialist at The Private Office, still tells clients to treat a standing order like a bill, paid the day after wages land. She has shown that £50 a month from age 20 grows to about £41,000 by 50 if 5% interest is paid each year, and that starting ten years later would take £101 a month to match it. That arithmetic holds whether the wrapper is a Lifetime ISA, a cash ISA inside the £20,000 2026/27 allowance, or the First Time Buyer ISA once it exists. It does not close a £69,523 gap on its own.

Builders Get the Sales and Buyers Share the Risk

The ministry was blunt about the industrial point. The new-build market, it said, faces “challenging headwinds” from global pressure and higher build costs, and the loan is meant as a stimulus as well as a deposit cut. Burnham said he believes the scheme will give builders “confidence to deliver the high-quality new homes the country needs.”

That is the same confidence argument used in 2013. The evaluation found it did pull through extra homes, about one in seven new builds over the life of the loan. It also found that in expensive areas the extra demand showed up in price more than in a new generation of owners. A 2.5% cash gate, tighter than the old 5% Help to Buy deposit, will let some renters exchange a landlord for a lender. It will not, by itself, make the same house cheaper.

If prices rise after purchase, the state’s 20% grows with them, which is the point of an equity loan from the Treasury’s seat. If prices stall, the buyer still holds a large mortgage on a new-build, and the 98% products that might have bought a second-hand terrace down the road are sitting on a different shelf. The people without the Bank of Mum and Dad are being offered the product that is also the product developers want filled.

The October Budget Still Holds the Missing Numbers

Healey has to put figures on the income cap, the local price caps, the length of the interest-free spell, the developer fee and the cost to the public purse. He also has to say how the First Time Buyer ISA bonus will compare with the £1,000 a year the Lifetime ISA still pays. Until those numbers exist, Your First Home is a shape, not a product a solicitor can complete.

A 2.5% deposit on the Great Britain first-time buyer average is about £5,730, plus the fees Moneyfacts already folds into its £16,850 working figure for a conventional 5% purchase. That is a smaller cash mountain than £69,523, and it is still a mountain if rent takes the same money first. The last time the state ran this loan, about half the customers said they could have bought without it, and prices rose most where the ladder was already steep.

Registration may open before the year is out. The Budget on 28 October 2026 is where the sequel either learns from 2013 to 2023, or reprints it with a new name and a thinner slice of cash up front.

Disclaimer: This article is news reporting and analysis of a government housing scheme, mortgage products and savings rules, and it is for information only. It is not mortgage advice, investment advice, tax advice or a recommendation to take any loan, open any ISA or buy any property. Anyone weighing a deposit, an equity loan or a Lifetime ISA should speak to a qualified mortgage adviser or independent financial adviser, and to a solicitor on any purchase, before acting. Figures, rates, caps and scheme rules are those published by the cited official sources and firms as used in this piece and can change at the Budget and in later lender price lists.