First Time Buyer Mortgages
Buying your first home comes with genuinely different considerations to any later purchase – deposit-building schemes, stamp duty relief, and lender criteria specifically designed around applicants with no property history. Understanding what’s actually available in 2026 helps you plan realistically rather than relying on outdated assumptions about schemes that no longer exist.
Who Actually Counts as a First-Time Buyer
You’re typically classed as a first-time buyer if you’ve never owned a residential property, in the UK or anywhere else in the world, either outright or with a mortgage. This applies individually within a joint application too – if you’re buying with a partner who has owned before, you may lose first-time buyer status and its associated benefits for the whole purchase, so it’s worth clarifying this early with your broker.
How Much Deposit You Actually Need
Most lenders require a minimum deposit of 5%, though a 10% deposit or higher generally unlocks meaningfully better rates. Recent industry data puts the average first-time buyer deposit at over £60,000, though this varies enormously by region, with London requiring considerably more than other parts of the UK. It’s worth understanding that stretching for a slightly larger deposit can sometimes pay for itself relatively quickly through a better rate, though the right choice depends on how long it would realistically take you to save the extra amount.
The Mortgage Guarantee Scheme (“Freedom to Buy”)
Made a permanent fixture of the market from July 2025, this scheme encourages lenders to offer 95% loan-to-value mortgages by having the government guarantee the portion of the loan between roughly 80% and 95% LTV. You don’t apply to the scheme directly – you simply apply for a 95% mortgage with a participating lender, and the guarantee sits behind it. It covers properties worth up to £600,000 and is open to home movers as well as first-time buyers, though it excludes second homes, buy-to-let, and some non-standard construction property types.
What This Means in Practice
The number of 95% loan-to-value deals available has grown substantially, now at levels not seen since before the 2008 financial crisis, giving first-time buyers a genuinely wider choice of low-deposit routes than in recent years. It’s still worth comparing rates carefully, since higher loan-to-value borrowing typically carries a rate premium reflecting the lender’s additional risk.
Lifetime ISA (LISA)
A Lifetime ISA lets you save up to £4,000 a year specifically toward a first home, with the government adding a 25% bonus on top of whatever you contribute. Two first-time buyers purchasing together can each hold and use their own LISA, combining their bonuses. The scheme currently carries a property price cap of £450,000, a figure that hasn’t moved since the scheme launched in 2017, which increasingly limits its usefulness in higher-priced areas like London and the South East.
Reform Under Consultation
A government consultation on replacing the LISA with a new first-time buyer ISA closed in August 2026, with a new product expected around 2028, though no firm launch date has been confirmed. Until any change takes effect, the LISA continues to operate under its existing rules, and it remains worth opening one if you’re eligible and saving toward a first home, even if final details of any successor product are still being worked out.
Shared Ownership
Shared Ownership lets you buy a share of a property, commonly between 25% and 75%, while paying rent to a housing association on the remaining share, meaningfully reducing the deposit and mortgage you need upfront. You can typically increase your share over time through a process called staircasing, working toward full ownership if you choose. Eligibility is generally capped at a household income of £80,000 a year, or £90,000 in London.
First Homes Scheme
Available in England only, First Homes offers a permanent discount, commonly 30-50% off market value, on selected new-build properties for eligible local first-time buyers, including priority in some areas for key workers. Availability is genuinely limited and eligibility criteria are set locally by individual councils, so it’s worth checking what’s actually available in your specific target area rather than assuming the scheme applies uniformly everywhere.
Right to Buy: Relevant if You’re Already a Council Tenant
If you’re currently renting from a council or housing association, Right to Buy may let you purchase your existing home at a significant discount rather than buying elsewhere as a new first-time buyer. Reform confirmed for later 2026/27 will raise the required qualifying tenancy from three to ten years and cap the discount at 15% of value, so if you’re considering this route, it’s worth understanding where you currently stand against the qualifying criteria. Our Right to Buy Mortgages page covers this scheme in full detail.
Stamp Duty Relief for First-Time Buyers
First-time buyers pay no Stamp Duty Land Tax on purchases up to £425,000, a genuine saving worth over £11,000 compared with standard rates at that price point. It’s worth factoring this relief into your overall budget from the outset, since it can meaningfully change what you can realistically afford once total upfront costs are considered.
Where Your Deposit Comes From: What Lenders Check
Lenders carry out a source of funds check on any significant deposit, and acceptable sources typically include personal savings, a gifted deposit from family, proceeds from selling other assets, and verified contributions from government-backed schemes. A gifted deposit is genuinely common in the UK market, but it’s worth having the paperwork – a formal gift letter and evidence of the giver’s own funds – organised properly before you apply, since gaps here are a common source of delay.
New-Build Incentive Schemes
Some housebuilders now offer schemes that use their own incentive budget to effectively reduce your mortgage rate for an initial period, working alongside a standard mortgage rather than replacing it. These can meaningfully lower monthly payments in the early years, though it’s worth understanding exactly how the incentive is structured and what happens once any discounted period ends, rather than assuming the reduced rate continues indefinitely.
Renting History as an Alternative to a Deposit
A newer category of product has emerged that assesses your rental payment history instead of requiring a conventional deposit, letting some renters with a strong, consistent payment record borrow the full value of a property. These products typically require at least 12 months of rent paid within the past 18, a clean credit history, and cap your monthly mortgage payment against your recent average rent. This remains a genuinely newer, more specialist route worth discussing with your broker if a conventional deposit is your main barrier to buying.
How Lenders Assess First-Time Buyer Affordability
Beyond your deposit, lenders assess your income, existing credit commitments, and spending patterns, commonly offering up to around 4-4.5 times your annual income, though some schemes specifically for first-time buyers offer higher income multiples for well-qualified applicants. It’s worth having a clear, honest picture of your regular spending before applying, since lenders increasingly scrutinise bank statements closely as part of affordability assessment.
Common Mistakes Worth Avoiding
Stretching your budget to the absolute maximum a lender will offer can create genuine long-term financial pressure, and it’s worth keeping a contingency fund rather than using every available pound of savings toward your deposit and purchase costs. It’s also worth checking scheme eligibility and thresholds directly with official sources before relying on any figure, since rules and caps do change, sometimes without much notice.
If Your Situation Is More Complex
If you’re self-employed, have a less-than-perfect credit history, or the property you’re interested in falls outside standard lending criteria, this doesn’t rule out a first-time purchase – it simply means working with lenders genuinely equipped to assess your specific circumstances. Our Adverse Credit Mortgages page covers this in more detail.
Frequently Asked Questions
What deposit do I need as a first-time buyer?
Most lenders require a minimum of 5%, though 10% or more typically unlocks better rates – recent data puts the average first-time buyer deposit at over £60,000, varying considerably by region.
Is Help to Buy still available?
No – the Help to Buy Equity Loan scheme closed to new applications in England in 2023; existing loan holders continue under the scheme’s original terms.
What’s the Mortgage Guarantee Scheme?
A permanent government-backed scheme, made permanent from July 2025, encouraging lenders to offer 95% loan-to-value mortgages for both first-time buyers and home movers, on properties up to £600,000.
Can I use a Lifetime ISA toward my deposit?
Yes, provided the property is under the £450,000 price cap – you receive a 25% government bonus on your contributions, though a reform to replace the LISA is currently under consultation.
Can I use a gifted deposit from family?
Yes, this is genuinely common – you’ll need a formal gift letter and evidence of the giver’s own source of funds as part of your lender’s checks.
Get in touch with details of your circumstances and deposit position, and we’ll help you understand which schemes and lenders genuinely suit your first purchase.
