Help schemes for first-time buyers explained

As you’re a first-time buyer, there are a number of government schemes designed to help you out when you’re looking to buy a house.

1. Help to Buy: Shared ownership

Under this scheme you can choose to buy a share of between 25% and 75% of a property. You can do this either by using your savings or a mortgage. The government then buys the remaining share of the home, and you rent it from them at a discounted rate.

The idea is that you can buy the remaining share of your home off the government in the future when you can afford it.

As with most schemes, you have to be eligible. With shared ownership:

• It’s only available in England.
• Your household income must be less than £80,000 a year, or £90,000 in London. 
• You can only use the scheme to buy a newly-built home, or one being sold by a housing association.

You can find out more about shared ownership on the government’s website.

• You have to save at least £1,600 into your Help to Buy: ISA before the 25% government bonus kicks in.
• To get your account started, you can pay in up to £1,200 in the first month, but after that you can only save up to £200 a month.
• The total amount you can pay into your Help to Buy: ISA is capped at £12,000, so the biggest bonus you can earn is £3,000. If you are buying your first home with a friend or a partner, however, you can both take out Help to Buy: ISAs, so together you can qualify for bonuses of up to £6,000.
• The property you are buying must cost no more than £250,000, or £450,000 in London.

Bear in mind that you don’t actually get the bonus until you buy the property. The solicitor who is handling the purchase must apply for it. The bonus is then added to the money you are spending on the property.

Check the fine print

Some of the Help to Buy schemes can be combined, but others can only be used alone.

3. Lifetime ISA

You can take out a Lifetime ISA to buy your first home. You must be a UK resident over 18 but under 40 to open a Lifetime ISA. A crown servant, their spouse or civil partner can also open a Lifetime ISA.

You can save up to £4,000 per year until you’re 50 and your first payment must be made before you turn 40. The £4,000 limit counts towards your annual ISA limit. For the 2024 – 2025 tax year, this is £20,000.

The government will add a bonus of 25% to your savings, up to a maximum of £1,000 per year.

Once you turn 50, you won’t be able to pay into your Lifetime ISA or earn the 25% bonus. However, your account will remain open, and your savings will earn interest or investment returns. 

You can only withdraw money from your ISA to help buy your first home if:

• The home you’re buying costs £450,000 or less
• You’re buying the property at least 12 months after making your first payment into the Lifetime ISA
• You use a solicitor or conveyancer to act for you during the purchase. The ISA provider will pay the funds directly to your solicitor or conveyancer
• You’re buying with a mortgage

Buying with someone else?

If you both have a Lifetime ISA, you can combine your savings and government bonuses. To qualify, you must:

• Both be first-time buyers
• Both meet every condition above

Got a Help to Buy ISA?

If you have a Help to Buy ISA and a Lifetime ISA, you can only use the government bonus from one of them towards your first home.

Money from a Help to Buy ISA can be transferred into a Lifetime ISA. If you do it the other way around, you’ll need to pay a 25% withdrawal charge.

You should always seek advice from a registered finance adviser before making any decisions.

4. Help to Buy: Equity loan

You can no longer apply for a Help to Buy: Equity Loan for properties in England. You can still apply for an equity loan in Wales.

Find out about other ways to get financial help from the government to buy a home.

The following is for information purposes only. 

With a Help to Buy: Equity Loan, the government lends you up to 20% of the cost of buying your first home, or 40% in London, so initially you only have to find 80% of the property’s value. 

Typically, you would still have to pay 5% of the property’s value as an upfront deposit and take a mortgage on the remaining 75%, with the government’s 20% stake helping reduce the initial deposit and your monthly mortgage payments.

You pay back the government loan over 25 years, but won’t be charged fees for five years. If you sell the home, the government gets 20% of the sale price.

More detail:

• The home you are buying must be a new build costing less than £600,000, or £300,000 in Wales.

5. Help to Buy: Mortgage guarantee

The Help to Buy: Mortgage Guarantee scheme is a way of reducing the deposit that you need to pay upfront when buying your first home.

The scheme is open to new 95% mortgages until 30 June 2025, with participating lenders offering 95% mortgages under the government guarantee as of 19 April 2021.

The following is for information purposes only.

It works the same way as a normal repayment mortgage, but the government guarantees that it will pay back your mortgage company if you don’t repay the loan and the lender ends up out of pocket.

The aim is to encourage mortgage providers to lend more to borrowers. It means that you could buy a home with a deposit as low as 5% of the purchase price.

However, this could mean that your monthly mortgage payments are high, so your lender will want to check that you can afford them.

More information:

• Can only be used to buy a home up to a value of £600,000.
• The mortgage you apply for must be less than 4.5 times your annual income.

6. Discounted sales

Discounted sales are locally run schemes where some homes built by English councils and housing associations are sold at a 25% to 50% discount to help local people get on the property ladder.

The criteria for discounted sale schemes are set locally, so they can vary. You will typically have to prove that you live or work in the area.

Other common conditions include:

• Your household income must be less than £60,000.
• This can’t be combined with any other Help to Buy schemes, apart from the Help to Buy: ISA.
• You must have a deposit and qualify to take out a mortgage on the property. 

It’s important to note that not every council and housing association offer discounted sales. You’ll have to contact yours to find out more.

Look into local schemes too

We’ve covered the key national schemes here. However, many local authorities operate their own schemes too. It’s worth exploring what’s on offer in your area.

If you have special circumstances, for example you are disabled, a key worker like a nurse or teacher, or serving in the Armed Forces, then there may also be extra help on offer.

Remember, this page does not provide advice; it is for information purposes only. You should seek financial advice from a registered provider.

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