Insights
New First Time Buyer Scheme 2026: How the 2.5% Deposit Could Work
by Melisa Cindil
The government has announced plans for a new first time buyer scheme aimed at making it easier for people to get onto the property ladder. The proposed Your First Home scheme could allow eligible first time buyers to purchase a new build property with a deposit of just 2.5%, supported by a 20% government backed equity loan.
Further details are expected to be confirmed at the Autumn Budget on the 28th October 2026, but the announcement has already generated plenty of interest among buyers looking to purchase their first home.
How could the scheme work?
Under the proposed scheme, eligible buyers would contribute a deposit of 2.5% of the property value, with the government providing a 20% equity loan. The remaining amount would then typically be funded through a mortgage.
For example, on a £300,000 property:
- A 2.5% deposit would be £7,500
- A 5% deposit would be £15,000
- A 10% deposit would be £30,000
For buyers who are able to afford mortgage repayments but are finding it difficult to save a larger deposit, this could significantly reduce the initial amount needed to purchase. The government has also said the equity loan is expected to include an initial interest free period.
What are the positives?
The main benefit is clear: a much lower deposit requirement. Saving for a deposit remains one of the biggest hurdles facing first time buyers, particularly alongside the cost of rent and general living expenses. A 2.5% deposit could allow some buyers to purchase sooner than they otherwise would have been able to.
The scheme could also:
- Give first-time buyers another route into homeownership
- Reduce the amount that needs to be saved upfront
- Support buyers who have sufficient income but a smaller deposit
- Provide additional support for the new build property market
For first time buyers across Essex and Suffolk, this could open up new possibilities, particularly in areas where there is a good supply of new build homes.
What don't we know yet?
There are still several important details to be confirmed. The government has indicated that the scheme will include household income limits and local property price caps, but the exact thresholds have not yet been announced.
We are also waiting to find out:
- When the scheme will officially launch
- Which developers will participate
- What the property price caps will be in different areas
- The full eligibility criteria for buyers
- How long the interest free period will last
- The terms for repaying the equity loan
- How widely available qualifying properties will be
It is also important to note that the scheme is currently expected to be available on new build properties only, meaning buyers considering older or previously owned homes will need to look at alternative mortgage options.
Looking to buy your first home?
At Oakheart Property, we help first time buyers across Essex and Suffolk navigate the buying process, from finding the right property through to progressing the sale.
If you're considering buying your first home, our team can help you understand what is currently available locally and keep you updated as further details of the new first time buyer scheme are announced. Contact our team today.
