Could a 2.5% deposit help you buy your first home?

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Getting onto the property ladder could soon become a little easier, thanks to a new Government scheme designed to help first-time buyers purchase a home with a deposit of just 2.5%.

The £4.7 billion Your First Home scheme, announced as part of the Autumn Budget on 28 October, aims to make homeownership more achievable by reducing the amount buyers need to save upfront.

Under the scheme, eligible first-time buyers will be able to access a Government-backed equity loan worth 20% of the purchase price of a qualifying new-build home, interest-free for the first five years.

For example, if you’re looking to buy a £300,000 home, a 2.5% deposit would mean saving £7,500, rather than the £15,000 typically required for a conventional 95% mortgage.

The Government’s equity loan would then contribute a further £60,000 towards the purchase, reducing the amount you’d need to borrow through a mortgage.

With applications expected to open in February 2027 and the first sales anticipated from April, the scheme could make a real difference to people hoping to buy their first home.

Hannah Newnes, our Sales and Marketing Director, said: “This is a really significant announcement for first-time buyers, particularly here in the South West, where getting onto the property ladder can feel increasingly difficult.

“The biggest hurdle for many buyers isn’t necessarily the monthly mortgage payment, but finding the money for a deposit in the first place. Reducing that requirement to just 2.5 per cent could make homeownership a reality for people who previously thought it was years away.

“We know how much buying a first home means to people, and anything that helps make that milestone more achievable is incredibly welcome.

“Of course, the success of the scheme will depend on how it works in practice, but this is a positive step towards giving more people the opportunity to own a home of their own.”

The scheme is designed for eligible first-time buyers purchasing qualifying new-build properties, with certain income and property price limits applying.

Outside London, the household income threshold is £110,000, while the maximum property price will depend on the area in which you’re buying.

The Government equity loan will be interest-free for the first five years, with interest payable from year six. The amount you repay will also be linked to the value of your home.

If you’re dreaming of owning your first home, we’re here to help you explore your options.

Visit www.cavannahomes.co.uk/Your-First-Home to learn more about the scheme and what it could mean for your homebuying journey.

Eligibility criteria, regional price caps and scheme conditions apply. The equity loan is repayable and linked to the property’s value. Figures are illustrative and actual costs will depend on individual circumstances.