England's new 2.5% deposit equity loan, explained

Last checked 28 September 2026

On 26 September 2026 the government announced Your First Home: first-time buyers in England could buy a new-build home with a 2.5% deposit, with the government lending 20% of the price as an equity loan and a mortgage covering the rest. The detailed rules come at the Budget on 28 October 2026.

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 scheme in plain words

You put down at least 2.5% of the price. The government lends you 20% as an equity loan, which is interest-free at first. A normal mortgage lender covers the remaining 77.5%. Because your mortgage is 77.5% of the price instead of 95%, your monthly mortgage payments are lower than with a 5% deposit mortgage on the same home.

The catch is that an equity loan is not a fixed debt. You pay back the same percentage of your home's value when you sell or repay, so if the home goes up in value, so does what you owe. It's only for new builds from developers that sign up to the scheme, and there will be a household income cap and local price caps (GOV.UK).

• 2.5%

  Minimum deposit you pay

• 20%

  Government equity loan, interest-free at first

• 77.5%

  Mortgage from a lender

• 28 Oct

  Budget: the full rules are due

Example from the announcement coverage: on a £230,000 starter home (Rightmove's average), that's a £5,750 deposit and a £46,000 equity loan (LBC).

What's confirmed and what isn't

Sources: the government's announcement (GOV.UK, 26 September 2026); HomeOwners Alliance (28 September 2026). Some outlets report a £600,000 maximum price and a five-year interest-free period (Global Banking & Finance Review), but neither appears in the government's announcement, so we treat them as unconfirmed.

Key dates

1. 1 April 2013

   Help to Buy equity loan starts

   The last big equity loan scheme in England opens: up to 20% (40% in London from 2016), 5% deposit, new builds (Wikipedia, GOV.UK statistics).

2. 31 October 2022

   Help to Buy closes to new applications

   Homes had to be finished by 31 March 2023 (HomeOwners Alliance).

3. 26 September 2026

   "Your First Home" announced

   A 20% government-backed equity loan for first-time buyers of new builds in England, with a 2.5% deposit and an initial interest-free period (GOV.UK).

4. 28 October 2026

   Budget: the rules

   Chancellor John Healey is due to set out the full details, including costs and the timetable. The household income cap and local price caps are expected then (LBC, HomeOwners Alliance).

5. By the end of 2026

   Pre-registration expected to open

   Reported as expected by the end of the year (HomeOwners Alliance). How and where to register hasn't been announced.

6. Not announced

   First purchases

   When buyers can actually complete on a home with the loan has not been announced.

Guides

• Calculator

  Deposit, mortgage, monthly payment, stamp duty and what the loan could cost to repay.

• How the scheme works

  The 2.5% + 20% + 77.5% split in plain words, with worked examples.

• Who qualifies

  What has been announced about eligibility, and what is still to come.

• Your First Home vs Help to Buy

  What is the same, what is different and what Help to Buy taught us.

• Repaying the equity loan

  Why you repay a share of the value, staircasing and fees, based on Help to Buy.

• Other first-time buyer schemes

  Shared Ownership, First Homes and the Lifetime ISA side by side.

• Key dates

  The Budget, pre-registration and everything else on the timeline.

• Getting ready

  Deposit, credit file, Agreement in Principle and finding new builds.

• Mortgage brokers explained

  What a whole-of-market broker does and how to check one.

• Questions and answers

  Short answers to the questions people are asking.