Autumn Budget Confirms Your First Home Scheme: £650k London Price Cap and Key Dates
The UK Government officially published full statutory regulations for the Your First Home equity loan scheme alongside the Autumn Budget on 28 October 2026. Backed by £4.7 billion in multi-year funding, the programme enables first-time buyers to purchase brand-new homes with just a 2.5% deposit and a 20% interest-free government equity loan.
For London, the Chancellor established clear regional parameters: property price caps of £650,000 in Inner London and £500,000 in Outer London, coupled with an elevated household income ceiling of £140,000. Online customer pre-registration opens before the end of December 2026, ahead of formal mortgage applications in February 2027.
Full Scheme Guide: For complete criteria, development shortlists, and step-by-step buyer advice, visit our dedicated Your First Home Scheme London Guide.
Key Headline Parameters at a Glance
The official MHCLG guidance clarifies the core metrics governing the scheme:
| Policy Metric | Inner London | Outer London | Rest of England |
|---|---|---|---|
| Maximum Property Price Cap | £650,000 | £500,000 | £220,000 - £375,000 |
| Annual Household Income Cap | £140,000 / year | £140,000 / year | £110,000 / year |
| Minimum Buyer Deposit | 2.5% (£16,250 max) | 2.5% (£12,500 max) | 2.5% (£5,500 - £9,375) |
| State Equity Loan Share | 20% (£130,000 max) | 20% (£100,000 max) | 20% (£44,000 - £75,000) |
| Commercial Mortgage Share | 77.5% | 77.5% | 77.5% |
| Initial Interest-Free Window | 5 Years (0%) | 5 Years (0%) | 5 Years (0%) |
The £140,000 household income limit is particularly significant for Londoners. Previous affordable homeownership schemes (such as Shared Ownership and First Homes) enforced a strict £90,000 household cap. Raising the threshold to £140,000 ensures middle-earning professional couples can participate.
Monthly Financial Impact: Official £282/Month Savings
Under Your First Home, buyers borrow at a 77.5% loan-to-value (LTV) ratio instead of taking out a 95% commercial mortgage. High-street lenders price sub-80% LTV mortgages at substantially lower interest rates, reducing monthly payments.
Official government modeling based on a £300,000 home over a 30-year term at 5% demonstrates the savings:
- Standard 95% Mortgage (5% Deposit): Monthly repayment of £1,530.
- Your First Home (2.5% Deposit + 20% Equity Loan): Monthly mortgage payment of £1,248.
- Direct Monthly Saving: £282 per month (over £3,380 saved annually).
Over the opening five-year interest-free period, this translates to £16,920 in cash savings compared to a conventional low-deposit mortgage.
Equity Loan Interest Structure After Year 5
The 20% state equity loan carries zero interest for the first 60 months. Starting in year six, progressive statutory fees apply:
- Years 1 to 5: 0% interest (only a nominal £1/month management charge).
- Year 6: 1.5% annual interest on the equity loan balance.
- From Year 7 onwards: 3.0% annual interest.
Interest payments are billed separately from your commercial mortgage and do not reduce the principal equity loan balance. Borrowers can redeem the loan at any time, based on an independent market valuation. If the property increases in value, you repay 20% of the updated price; if the property falls in value, the government absorbs 20% of the reduction.
Official Implementation Timeline
The government has confirmed a four-stage rollout:
- December 2026: Online customer pre-registration opens. First developer accreditation agreements signed.
- February 2027: Participating high-street lenders open formal customer mortgage applications.
- April 2027: First property sales complete and first buyers move into their new homes.
- 2027 to 2031: £4.7 billion total budget deployed (£700 million in 2027-2028, scaling to £1 billion per year thereafter).
Preparing for the Launch in London
With price caps confirmed at £650,000 for Inner London and £500,000 for Outer London, first-time buyers should start shortlisting qualifying stock now:
- Browse Qualifying Homes: Explore accessible new developments across Greater London in our London new builds catalog or search modern flats in London.
- Check Approved Housebuilders: Leading developers are already preparing participation agreements. Inspect active masterplans from top property developers.
- Model Your Budget: Calculate monthly payments and test affordability scenarios with our free mortgage payment calculator.
