Chancellor John Healey has confirmed the income limits, deposit rules and launch timetable for Your First Home in Labour’s 2026 Autumn Budget.
Your First Home was announced on 26th September for first-time buyers in England purchasing new-build homes from participating developers. It is intended to help people who would otherwise struggle to buy, while giving housebuilders more customers for the homes ministers want delivered.
I would look beyond the small deposit before deciding what this means for a particular development. Your First Home could improve sales prospects, but buyers still need a suitable mortgage, and builders need to understand the cost of joining.
Your First Home terms confirmed at the Budget
The Budget document sets out the main rules:
| Measure | Confirmed terms |
|---|---|
| Government equity loan | Up to 20% of the purchase price. |
| Deposit | Minimum 2.5%, subject to the participating lender’s affordability and lending requirements. |
| Household income | Cap of £110,000 outside London; £140,000 in London. |
| Property prices | Caps based on local authority median prices; £650,000 in inner London and £500,000 in outer London. |
| Interest | 0% for years 1 to 5, 1.5% in year 6 and 3% from year 7. |
| Developer contribution | Progressive fee on homes sold: 1% on the first 100 each year, 3% on homes 101 to 250, and 4% above 250. |
Pre-registration opens by the end of December 2026, full applications from February 2027 and first loans from April 2027. Homes England will initially deliver the scheme.
Developer charges and local price caps now confirmed
The government’s detailed Your First Home guidance, published on 28 October 2026, goes further than the pre-Budget reports. Developers must sign a participation agreement and will pay a progressive fee on homes sold through the scheme. The first 100 annual sales carry a 1% charge, sales 101 to 250 carry 3%, and sales above 250 carry 4%. These are bands for successive sales, not one flat percentage imposed retrospectively on every home.
For example, an eligible developer selling 500 homes through Your First Home in one year would pay 1% on the first 100, 3% on the next 150 and 4% on the remaining 250. The government’s worked example puts the average contribution at 3.1%. Smaller builders selling fewer than 100 such homes in the year would be in the 1% band, subject to the participation rules. A developer appraisal must allow for that fee as well as the normal sales and build costs.
The guidance also gives example price caps of £375,000 in Reading, £320,000 in North Devon and £355,000 in Manchester. Inner London remains £650,000 and outer London £500,000. On 3 November 2026 the government published the full Your First Home property price caps for local authorities in England. The published limits include £355,000 in Manchester, £235,000 in Liverpool, £305,000 in Leeds, £325,000 in Bristol, £415,000 in Oxford, £505,000 in Cambridge and £650,000 in Camden. Those differences are material to a housebuilder’s expected eligible sales and should be checked against the specific local authority, rather than a broad regional assumption. The scheme is not open to applications today: buyer pre-registration and developer registration are expected before the end of December 2026, with buyer applications from February 2027 and first sales from April.
Five years interest-free does not mean interest-free for life
The new guidance confirms the interest timetable that a buyer should use when comparing mortgage offers. Government equity loan interest is 0% for years one to five, 1.5% in year six and 3% from year seven. Unlike a mortgage capital repayment, these interest payments do not reduce the equity loan principal. For a £60,000 equity loan, the government’s example gives £75 a month in year six and £150 a month from year seven, assuming no repayment of the equity loan.
There is a second issue which could matter even more to buyers who intend to remain in their home for many years. The equity loan is normally repaid as a share of the home’s current value, rather than simply returning the original cash advance. If the loan was 20% of a £300,000 purchase, the initial £60,000 becomes £64,000 to repay if the home is valued at £320,000 when the loan is settled. If the value falls to £280,000, the equivalent loan balance is £56,000. The government therefore shares both rises and falls in the property value.
The £4.7 billion comes from redirected departmental loan and equity budgets. Government estimates around 70,000 households will benefit, supporting 20,000 new homes. Annual funding caps apply.
The income thresholds had already appeared in media reports on 23rd October. Healey’s Budget now confirms them. Buyers comparing coverage should distinguish those earlier reports from the published terms, particularly where older articles use lower income limits.
A buyer scheme with a housebuilding purpose
Your First Home is being presented as help for aspiring homeowners, but its restriction to new-build homes gives it a second purpose. It directs purchasing power towards the product ministers also want developers to build more quickly.
More permissions are clearly needed if output is to rise. But a permission is not a completion, and developers decide when to open outlets and release homes partly by reference to expected sales. Our earlier report on England’s weakening permissions pipeline explains the planning side of that problem.
The National House Building Council, which provides new-home warranties, reported on 26th October that its third-quarter registrations were 13% below a year earlier. These registrations indicate its development pipeline; they are not a count of completed homes.
Speaking before the Budget, its chief strategy officer Daniel Pearce said: “The proposed Your First Home scheme is a welcome and important step, but there is no single solution.”
So the two constraints can exist together. A site can be difficult to permit and difficult to sell. A lower deposit also does not solve every affordability problem. Buyers still need a lender willing to advance the first mortgage and must be able to service it.
What still needs checking
Your First Home is separate from the existing First Homes scheme, which offers eligible purchasers a discount on a home’s market value. An equity loan is borrowing, not a permanent discount. Similar names should not lead anyone to assume the same eligibility rules or planning treatment.
The local-authority price-cap list is now available, but detailed repayment administration, participating lenders and the final operational terms still need checking as further scheme documents are released. For developers, the local cap is a ceiling for an eligible new-build sale under this equity-loan scheme, not a new planning policy, a valuation or a guarantee of buyer demand. Scheme eligibility will also depend on the buyer and the developer’s participation. I would want those details before putting Your First Home assumptions into an appraisal or recommending a purchase route.
The Budget gives this policy a much firmer shape. Its housing-market test remains whether the extra purchasing power produces more homes, and whether those homes reach people who could not otherwise buy.
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