Autumn Budget 2026 for First-Time Buyers: Your First Home Scheme in London

Buyer Guides · 1 November 2026 · 16 min read

The Autumn Budget 2026 confirmed the Your First Home scheme, which lets first-time buyers purchase a new-build home with a 2.5% deposit and a 20% government loan. It also cut the Lifetime ISA charge and announced a new First Time Buyer ISA. Here is what every Budget measure means for first-time buyers in London, with borough caps and real East London costs.

Chancellor John Healey delivered the Autumn Budget on 28 October 2026, and first-time buyers were the big winners on property. The headline was the Your First Home scheme, backed by £4.7 billion of government lending.

The Budget also changed how Lifetime ISAs work for London buyers, confirmed a new savings account from 2029, and left stamp duty untouched. Together, these measures change the maths for many renters in Hackney, Newham and Waltham Forest. For example, a £450,000 new-build flat could need just £11,250 upfront, rather than £22,500 or more.

However, the new scheme has limits. It only covers new-build homes, the price cap depends on your borough, and the loan charges interest after five years. Below, we explain each Budget announcement for London buyers with real numbers. For the changes affecting landlords and homeowners, see our Autumn Budget 2026 property guide.

What the Autumn Budget 2026 announced for first-time buyers

Here is every Budget measure that affects first-time buyers, in one place.

The government says the Your First Home scheme will help around 70,000 households and support about 20,000 new homes. Funding is capped each year, and a review is planned for next autumn. In the Chancellor's words, "hope starts with a home."

How the Your First Home scheme works

The Your First Home scheme splits the price of a new-build home into three parts. First, you pay a deposit of between 2.5% and 15%. Next, the government lends you 20% as an equity loan. Finally, a repayment mortgage from a participating lender covers the remaining 77.5%.

You own the home outright from the day you complete. According to the official GOV.UK guidance, the government is not a joint owner or your landlord. Instead, it holds a loan secured against the property.

Because the loan is linked to the home's value, you repay 20% of what the property is worth when you sell or pay it off. So if the value rises, you repay more. If it falls, you repay less.

The scheme covers England only, with £4.7 billion of funding over five years. Homes England will run it at first. Later, the planned National Housing Bank is expected to take over.

Inner or outer London: which Your First Home scheme cap applies to you?

This is the detail most London buyers miss. There are two London caps, and the line between them is not always where you would expect.

The government says inner and outer London follow the definitions in the London Plan 2021. Under that plan, Greenwich and Newham count as inner London, while Haringey counts as outer London.

What this means in East London

The cap follows the council, not the postcode or the nearest station. That creates some sharp edges in our part of London:

• Stratford (E15) is in Newham, so new-builds there can cost up to £650,000.
• Leyton (E10), just over the border, is in Waltham Forest, so the cap drops to £500,000.
• Dalston, Homerton and Stoke Newington are in Hackney, which has the higher cap.
• Tottenham is in Haringey, so the £500,000 cap applies.
• Barking, Dagenham and Ilford sit in outer boroughs, so the lower cap applies there too.

Some postcodes also cross borough lines. Always check which council a development sits in before you reserve.

What the Your First Home scheme costs in East London

Here is how the numbers work on typical new-build prices in our area. These are illustrations only, and your figures will depend on the home and your lender.

Now compare that with a standard 95% mortgage. On the £450,000 Hackney flat, you would need a £22,500 deposit and a £427,500 mortgage. With the Your First Home scheme, you need half the deposit and borrow £78,750 less from the bank.

A smaller mortgage also means you need less income to pass a lender's checks. For instance, if a lender offered 4.5 times income, the Hackney flat would need about £77,500 of household income. On a 95% mortgage, you would need roughly £95,000. Lenders set their own limits, so treat this as a guide only.

Who can use the Your First Home scheme?

According to GOV.UK, you must meet all of these conditions:

• You are a first-time buyer.
• You are buying a new-build home in England from a participating developer.
• The price is within the local cap, which is £650,000 or £500,000 in London.
• Your total household income is £140,000 or less in London, or £110,000 elsewhere.
• The home will be your main home.
• You can get a repayment mortgage from a participating lender.

Some details are still to come. The government has not yet defined "first-time buyer" for the scheme or explained how joint purchases will work. Under Help to Buy, every buyer had to be a first-time buyer, and many solicitors expect a similar rule here.

Self-employed buyers can use the Your First Home scheme too. Even so, they still need to pass a lender's checks, so speak to a mortgage adviser early about your accounts.

Interest and repaying the loan

Under the Your First Home scheme, the equity loan is interest-free for the first five years. After that, interest is charged on the amount you borrowed:

You pay this interest on top of your mortgage, and it does not reduce what you owe. In other words, it is a charge for using the money, not a repayment.

How repayment works

You normally repay the loan when you sell. You can also pay off some or all of it earlier, for example when you remortgage. Either way, you repay 20% of the home's value at that time, based on an independent valuation.

Take the £450,000 Hackney flat as an example:

• If it is worth £500,000 when you repay, you owe £100,000.
• If it is still worth £450,000, you owe £90,000.
• Should it fall to £420,000, you owe £84,000.

The government will publish rules on minimum repayments, valuations and fees before launch. Meanwhile, many buyers will aim to clear the loan before year six, often when they remortgage.

The Lifetime ISA change: better news for London buyers

Before the Budget, you paid a 25% charge if you used a Lifetime ISA to buy a home costing more than £450,000. Because the government bonus is also 25%, that charge ate into your own savings too.

From 29 October 2026, the charge falls to 20% for first-time buyers purchasing above the £450,000 cap. In practice, you now lose the bonus but keep every pound you saved. All other early withdrawals still face the full 25% charge.

Take a Lifetime ISA holding £20,000, made up of £16,000 of savings and a £4,000 bonus:

• At £450,000 or less, you can use the full £20,000.
• Above £450,000 before the change, the 25% charge left you £15,000.
• Above £450,000 now, the 20% charge leaves you £16,000.

This matters in London, where many first homes cost more than £450,000. The Treasury has not yet said whether you can use a Lifetime ISA alongside the Your First Home scheme. We will update this guide once it does.

The new First Time Buyer ISA from April 2029

The Budget also confirmed a new First Time Buyer ISA. It replaces the Lifetime ISA for new savers from April 2029. According to MoneySavingExpert, it will work like this:

• You can save up to £4,000 a year.
• The government adds a 25% bonus on your final balance, up to £20,000 in total.
• There is no withdrawal charge when you use it for an eligible first home.
• The property price cap stays at £450,000.
• Anyone aged 18 or over can open one, with no upper age limit.

You cannot transfer a Lifetime ISA into the new account. However, you can use both towards the same purchase. Sarah Coles, head of personal finance at AJ Bell, called it "a step forward for people otherwise being priced out of the scheme."

For London buyers, the catch is clear. The government chose not to raise or regionalise the £450,000 cap, so it still rules out many homes in inner London.

Stamp duty and mortgage rates after the Budget

Stamp duty did not change in the Autumn Budget. First-time buyers pay nothing on the first £300,000 and 5% on the part from £300,001 to £500,000. Above £500,000, the relief disappears and standard rates apply.

Under Help to Buy, stamp duty was based on the full price, not just your share. Conveyancers such as Setfords expect the same for the Your First Home scheme, although this is not yet confirmed. On our examples, that would mean:

• £425,000 Walthamstow flat: £6,250
• £450,000 Hackney flat: £7,500
• £600,000 Stratford flat: £20,000, because first-time buyer relief stops at £500,000

What about mortgage rates?

The Budget did not change mortgage rules. Even so, it doubled the bank surcharge from 3% to 6% for 15 months, and some lenders have warned this could feed into pricing. Meanwhile, Moneyfacts puts average two and five-year fixed rates just below 6%.

Finally, budget for legal fees, a mortgage valuation and moving costs. Most new-build flats in London also carry a service charge. Our guide to leasehold reform explains what is changing for flat owners.

Your First Home vs Help to Buy London

Many Londoners remember Help to Buy London, which closed to new buyers in 2023. The new scheme has a similar shape, but its London terms are less generous.

The smaller loan matters most in London. With a 40% loan, buyers needed a mortgage for just 55% of the price. With 20%, the mortgage covers 77.5%, so you need much more income.

Paula Higgins, chief executive of the HomeOwners Alliance, has made the same point: "The government should consider whether London needs a higher equity loan."

Is the Your First Home scheme a good idea in London?

For the right buyer, yes. Still, it is worth weighing both sides before you commit.

The benefits

• A much smaller deposit, so you can buy years sooner.
• A smaller mortgage, which helps you pass affordability checks.
• Five years without interest on the loan.
• A brand new home with a warranty and lower energy bills.
• If prices fall, the amount you repay falls too.

The risks

• New-build only. Older flats and houses, which make up most of the London market, do not qualify.
• Limited choice. Rightmove estimates the share of London new-builds an average solo first-time buyer could afford rises from just 1% to 5%.
• The new-build premium. New homes often cost more than similar older ones, and values can dip once they become second-hand.
• Interest from year six. This adds to your monthly costs if you have not repaid.
• Service charges. These can be high on new-build flats, and they tend to rise.

As Stephanie Charman of the Association of Mortgage Intermediaries put it, "The success of the scheme will depend on getting the detail right."

In our view, the scheme works best for buyers who plan to stay at least five years. It also helps to have a plan to pay down the loan and to choose a well-built home in a strong location. Our guide to buying a quality new-build apartment explains what to look for. If a new-build is not right for you, compare other first-time buyer schemes in London and no-deposit mortgages.

Autumn Budget and Your First Home scheme key dates

Pre-registration does not commit you to buying. It does, however, confirm your eligibility and your local price cap. Funding is capped each year, so it makes sense to register as soon as it opens.

How to get ready now

You cannot apply yet, but you can do a lot to be ready when the doors open.

1. Check your borough's cap. Use the table above to see whether you are looking in inner or outer London.
2. Save your deposit. Aim for at least 2.5%, plus stamp duty, legal fees and moving costs.
3. Speak to a mortgage adviser. Ask what you could borrow on a 77.5% repayment mortgage.
4. Tidy up your credit file. Pay bills on time, register to vote and reduce card balances.
5. Shortlist areas. Compare commute times, schools and typical service charges.
6. Line up a conveyancer. Developer deadlines are often tight, so instruct a solicitor early.
7. Pre-register. Watch GOV.UK in December 2026 and sign up as soon as you can.

Not sure where to start your search? Read our first-time buyer guide to East London, then explore our area guides to Dalston, Homerton and Stoke Newington.

Frequently asked questions