Building a deposit remains one of the biggest obstacles for many aspiring homeowners looking to get onto the property ladder, and the government’s proposed ‘Your First Home’ scheme aims to help address that challenge. Under the proposals, eligible first-time buyers purchasing a new-build property from a participating developer could contribute a deposit of 2.5%, supported by a government-backed equity loan of up to 20%.
For someone buying a £240,000 property, that could mean finding £6,000 themselves, potentially making homeownership feel more achievable for buyers who have struggled to save while meeting the cost of rent and other living expenses.
The announcement also raises questions about what the proposals could mean for shared ownership, which has long provided a route to homeownership for people who cannot afford to buy a suitable home outright. Buyers purchase an initial share of a property and pay rent on the remainder, reducing the size of the mortgage and deposit required.
This means there is some potential crossover between the customers the two schemes could support. A first-time buyer with a reasonable income but limited savings may previously have seen shared ownership as their most realistic option. If a relatively small deposit could instead help them buy an entire new-build home with government support, they may have another route to consider.
However, the comparison is not as simple as a 2.5% deposit versus shared ownership. Under Your First Home, buyers would still need a mortgage to fund most of the purchase and would have a government equity loan attached to their home. The equity loan will have an initial interest-free period, with further details still to be announced.
This is an important distinction because the Your First Home scheme and shared ownership could ultimately address different barriers to homeownership.
For some households, the main challenge is the deposit. They may have enough income to support a larger mortgage but find it difficult to accumulate sufficient savings while paying rent and other costs. The scale of that challenge is highlighted by the latest English Housing Survey, which found the median deposit paid by recent first-time buyers was £36,500 in 2024-25.
For these buyers, reducing the upfront deposit requirement could make a meaningful difference. For others, however, the challenge is not how much they can save but how much they can sustainably afford to borrow. A household may be able to find a 2.5% deposit but still be unable to secure a mortgage large enough for the home they need, even with support from an equity loan.
This is where shared ownership could continue to play a distinctly different role. Purchasing a share rather than the entire property can reduce the mortgage requirement, providing another route for buyers facing affordability constraints.
The distinction between being deposit constrained and affordability constrained could therefore become increasingly important.
Further information on Your First Home is expected at the Budget, including detail on household income and local property price caps, costs and implementation. Getting that eligibility and targeting right will be important, both to ensure support reaches first-time buyers who need it most and to avoid additional demand simply feeding through into higher house prices. These details should also give the industry a clearer picture of who the scheme will support and how it may sit alongside existing options such as shared ownership. Until then, it is too early to judge the extent to which the two will overlap.
What we can say at this stage is that there is unlikely to be a single solution to the challenges facing first-time buyers. Shared ownership, higher loan-to-value mortgages, family-assisted products and government-backed schemes can all address different barriers to homeownership. For lenders and brokers, the question should therefore be less about which route is better and more about understanding what is preventing an individual buyer from purchasing a home.
Your First Home could ultimately sit alongside it as another route into homeownership, particularly for buyers whose biggest hurdle is saving a deposit. Shared ownership may continue to play an important role for those constrained by how much they can sustainably borrow. The detail announced at the Budget will be crucial in determining exactly where each route fits.
