The First Homes Scheme Explained (2026): Discounts, Eligibility & Mortgages
The First Homes scheme lets eligible first-time buyers in England buy a new-build home for at least 30% below market value — and that discount stays with the property forever. Here’s exactly how it works, who qualifies, the catch on resale, and how to get the mortgage that goes with it.
Quick Answer
The First Homes scheme is a UK government initiative (England only) that lets eligible first-time buyers purchase a selected new-build home at a discount of at least 30% — and up to 40% or 50% in some areas — off the full market value. Unlike Help to Buy, it’s not a loan: you own 100% of the home from day one, with no equity loan and no rent. As of 2026, your household income must be no more than £80,000 (£90,000 in London), and the price after discount must not exceed £250,000 (£420,000 in London).
The trade-off: the discount is permanent, written into the property’s title deed, so when you sell you must pass the same percentage discount to the next eligible first-time buyer. You must also fund at least 50% of the price with a mortgage. Your home may be repossessed if you do not keep up repayments on your mortgage.
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What Is the First Homes Scheme?
Launched in 2021, First Homes is an English government scheme that requires developers of certain new-build sites to sell a proportion of their homes to local first-time buyers and key workers at a discount of at least 30% below open market value. The idea is to give people a route onto the ladder in their own area, without competing against investors and cash buyers at full price.
The defining feature — and what sets it apart from every other scheme — is that the discount is permanent. It’s locked to the property by a legal covenant registered at HM Land Registry, so every future sale must also be at that same percentage discount, to another eligible buyer. This keeps the home affordable “in perpetuity” for a chain of first-time buyers. It’s fundamentally different from the closed Help to Buy (which was an equity loan) and from shared ownership (part-buy, part-rent) — with First Homes, you own 100% outright.
How the Discount Actually Works
The mechanics are simpler than they first sound, but two numbers govern everything: the discount percentage and the price cap.
Discount + price cap, worked through
The minimum discount is 30%, but local authorities can require 40% or 50% where needed for affordability. On top of that sits a price cap: after the discount, the home must cost no more than £250,000 (or £420,000 in Greater London). So a £350,000 new-build with a 30% discount costs £245,000 — under the cap, so that’s your price. In pricier areas the discount is pushed higher than 30% specifically to bring the price beneath the cap.
Crucially, this isn’t a loan and there’s nothing to repay — the discount is simply the price you pay. You’re not borrowing the 30%; the home genuinely costs you 30% (or more) less. That also has a happy knock-on effect for your deposit and, often, your stamp duty — more on both below.
Who Is Eligible for the First Homes Scheme?
There are national rules everyone must meet, plus local rules councils can add on top (as of 2026 — confirm current criteria with GOV.UK and the local authority):
| National criteria (must meet all) | Detail |
|---|---|
| First-time buyer | You must never have owned a home anywhere in the world. Buying jointly? Every person must be a first-time buyer — one prior owner disqualifies the whole application. |
| Income cap | Household income no more than £80,000 a year before tax (£90,000 in London), based on the previous tax year. |
| Main residence | The home must be your only or main home — no buy-to-let, no second homes. |
| Mortgage required | You must fund at least 50% of the discounted price with a mortgage — even if you could pay cash. |
On top of these, councils can set local eligibility criteria for the first 3 months a property is on sale — typically prioritising key workers (nurses, teachers, police and similar) or those with a local connection. After 3 months, if no eligible local buyer is found, those local criteria can be relaxed. Some priority also applies to armed-forces personnel and veterans, who are often exempt from the local-connection test. If you’re a key worker, this scheme is often aimed squarely at you — as are related routes covered in our first-time buyer guide.
The Mortgage and Deposit Rules — What Buyers Miss
This is where a broker matters, and where several buyers trip up:
- You must have a mortgage for at least 50% of the discounted price. First Homes is designed for people who need to borrow — even a cash buyer must take a mortgage covering at least half. So getting the mortgage sorted isn’t optional; it’s a scheme requirement.
- Your deposit is 5% of the discounted price — not 5% of the full market value. This is one of the scheme’s biggest financial wins: because the price is already 30%+ lower, the cash deposit you need shrinks proportionally. A 10%+ deposit still unlocks better rates, but 5% is the legal minimum.
- Not every lender offers First Homes mortgages. A range of banks and building societies support the scheme (several offer up to 95% LTV on it), but many don’t — so applying to the wrong lender wastes time. Matching to a First-Homes-friendly lender is exactly what a broker does.
- Affordability still applies. The discount lowers the price, but you’re still assessed on income, outgoings and the stress test like any borrower.
Two money-savers to stack on top
First, a Lifetime ISA pairs beautifully with First Homes: the government adds a 25% bonus on up to £4,000 saved a year (up to £1,000 free annually) toward your deposit. Second, because First Homes purchases are often below the first-time-buyer stamp duty nil-rate threshold, many First Homes buyers pay zero stamp duty — a further saving worth confirming for your price and area.
The Catch: What Happens When You Sell
No honest guide skips this, because it’s the real trade-off. The discount is permanent, so you can never sell at full market value. When you sell, an independent RICS valuer assesses the current open market value, and you must sell at the same percentage discount you received — to another buyer who meets the First Homes eligibility criteria at that time.
The upside
Your equity still grows — as the market rises, your discounted value rises too. And you needed a smaller deposit and mortgage to get in, on a home you own 100% of, with no rent or equity loan.
The honest downside
Your equity grows proportionally, not absolutely. If you bought at a 30% discount, you sell at a 30% discount — so you capture less cash growth than a full-price owner would. You also can only sell to another eligible buyer, which can narrow your pool.
A worked example: you buy at a 30% discount when market value is £300,000, paying £210,000. Five years on, market value is £350,000 — you must sell at £245,000 (30% below £350,000). You’ve gained £35,000 in equity, less than the £50,000 a full-price owner would have, but on a home you got onto the ladder with far less cash. Whether that trade is right for you depends on your plans — which is worth thinking through before you commit.
How to Find and Apply for a First Home
One important thing to be clear about: we’re a mortgage introducer, not the scheme operator or a property portal — so we can help with the mortgage, but the properties themselves come through developers and councils. The typical route:
- Check your local council’s website for First Homes availability and any local eligibility criteria in your area.
- Look at participating developers — major housebuilders run First Homes on selected new-build sites; property portals also list some.
- Confirm you meet the income cap and first-time-buyer rules before you get attached to a property.
- Get a mortgage agreement in principle — because good First Homes properties move fast (popular ones get dozens of applicants in a weekend), being mortgage-ready is a genuine advantage.
- Reserve, then instruct a conveyancer experienced in First Homes, as the covenant adds legal steps.
That fourth step is where we come in: having your borrowing confirmed and an agreement in principle in hand means you can move the moment the right home appears, rather than losing it while you scramble for finance.
First Homes vs Other First-Time Buyer Routes
First Homes is one of several options, and it isn’t always the best fit — the right route depends on your circumstances:
- vs Shared Ownership — shared ownership is part-buy/part-rent on a share of the home; First Homes is 100% ownership at a discount. First Homes usually means lower ongoing cost (no rent), but shared ownership can suit those who can’t yet afford even a discounted whole home.
- vs a standard 95% mortgage — a normal first-time buyer 5% deposit mortgage gives you full market-value ownership (and full future gains) but at full price. First Homes trades some future gain for a much lower entry price.
- vs Help to Buy — Help to Buy (the equity loan) is closed to new applicants; First Homes is one of its successors.
Because these interact with your deposit, income and long-term plans, it’s worth talking them through with a broker who can model each against your numbers rather than guessing which is cheapest.
The bottom line
The First Homes scheme is a genuine leg-up for eligible first-time buyers in England: at least 30% off a new-build, 100% ownership, a smaller deposit, and often zero stamp duty. The trade-off is a permanent discount that caps your future gains and limits who you can sell to — a fair deal for many, but one to enter with eyes open. And because you must fund at least half with a mortgage, and not every lender offers them, the mortgage is central, not an afterthought.
Compare mortgage deals and we’ll match you with an FCA-regulated broker who knows which lenders support First Homes and can get you agreement-in-principle-ready — free, with no obligation and no fee to you.
Frequently Asked Questions
What is the First Homes scheme?
It’s a UK government scheme in England that lets eligible first-time buyers purchase a selected new-build home at a discount of at least 30% (up to 50% in some areas) off market value. Unlike Help to Buy, it’s not a loan — you own 100% of the home outright, with no equity loan or rent. The discount is permanent and passes to the next eligible buyer when you sell, keeping the home affordable for future first-time buyers.
Who is eligible for the First Homes scheme?
You must be a first-time buyer (all buyers, if purchasing jointly), with a household income no more than £80,000 a year before tax (£90,000 in London) based on the previous tax year, and the home must be your only or main residence — no buy-to-let. You must also fund at least 50% of the price with a mortgage. Councils can add local criteria for the first 3 months, often prioritising key workers or those with a local connection.
How much deposit do I need for a First Homes property?
The legal minimum is 5% of the discounted purchase price — not 5% of the full market value. Because the price is already reduced by 30% or more, the cash deposit you need is proportionally smaller, which is one of the scheme’s biggest advantages. A deposit of 10% or more will give you access to better mortgage rates and lower monthly repayments, but 5% is the minimum required.
Can I get a mortgage on a First Homes property?
Yes — in fact you must, as the scheme requires you to fund at least 50% of the discounted price with a mortgage, even if you could pay cash. A range of banks and building societies offer First Homes mortgages, some up to 95% loan-to-value, but not all lenders participate. Applying to a lender that supports the scheme is important, and a broker can match you to one and arrange an agreement in principle.
What happens when I sell a First Homes property?
You must sell at the same percentage discount you received, applied to the current open market value (assessed by a RICS valuer), and only to a buyer who meets the First Homes eligibility criteria. So if you bought at a 30% discount, you sell at 30% below market value. Your equity still grows as the market rises, but proportionally rather than absolutely — you capture less cash growth than a full-price owner, which is the scheme’s main trade-off.
Is the First Homes scheme available across the UK?
No — the First Homes scheme is only available in England. Scotland, Wales and Northern Ireland run their own first-time buyer and affordable housing schemes instead. The scheme also applies only to selected new-build properties on participating developments, so availability varies by area. Your local council’s website is the best place to check what First Homes properties and local eligibility criteria apply where you want to buy.
- GOV.UK — First Homes scheme: first-time buyer’s guide
- House of Commons Library — First Homes for first-time buyers in England briefing
- DLUHC / MHCLG — First Homes local authority guidance
- HM Revenue & Customs — Stamp Duty Land Tax rates; Lifetime ISA rules
Important information
nextmove is an introducer, not a lender, adviser, or the operator of the First Homes scheme. This article is for general information only and does not constitute financial advice. Scheme rules, discounts, income and price caps are set by government and local authorities, change over time, and vary by area — always confirm current details on GOV.UK and with your local council before proceeding. We introduce you to FCA-regulated mortgage brokers who can advise on your individual circumstances, and we may receive a fee or commission for doing so.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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