What government schemes exist to help first-time buyers?
5 August 2026 · MoneyAngel Academy
A Lifetime ISA can add a government bonus to the money you are saving. The Mortgage Guarantee Scheme supports mortgages with deposits as small as 5%. First Homes can reduce the price of certain properties in England. Shared Ownership and shared equity schemes can reduce how much of a property you need to fund yourself at the start. There are also tax reliefs that can reduce some of the other costs of buying.
That distinction matters. If the deposit is what is holding you back, a route that helps you save or buy with a smaller deposit may make a difference. If homes in your area are simply too expensive, a discounted purchase or shared ownership route may be more relevant. And if the problem is the monthly cost of the mortgage, reducing the deposit requirement alone may not solve it.
The schemes available also depend on where in the UK you are buying, so there is no single list that applies equally across England, Scotland, Wales and Northern Ireland.
What kind of help do the main schemes provide?
Lifetime ISA
What it can change
Adds a government bonus to eligible savings
What else matters
Withdrawal rules and property limits apply
Mortgage Guarantee Scheme
What it can change
Makes 5% deposit mortgages more widely available
What else matters
You still need to pass the lender’s affordability checks
First Homes
What it can change
Reduces the purchase price of certain homes in England
What else matters
Eligibility and availability are limited
Shared Ownership
What it can change
Lets you buy a share of a property rather than all of it
What else matters
You normally pay rent on the remaining share
Shared equity
What it can change
Another provider or government holds an equity share
What else matters
The value of that share can change with the property
First-time buyer tax relief
What it can change
Reduces some of the tax due when you buy
What else matters
It does not increase how much you can borrow
Two schemes might both help someone buy sooner while leaving them in very different financial positions afterwards. That is worth keeping in mind when comparing them.
Lifetime ISA
A Lifetime ISA can be used by eligible first-time buyers to build a deposit. You can open one between the ages of 18 and 39 and contribute up to £4,000 each tax year until age 50. The government adds a 25% bonus, so saving the full £4,000 would add £1,000 before any interest or investment growth.
To use the money for a first home, the property must currently cost £450,000 or less, you must be buying with a mortgage and the account must have been open for at least 12 months from your first payment. If two eligible first-time buyers purchase together and both have Lifetime ISAs, both can use their savings and bonuses.
The important trade-off is access to the money. Taking money out for another reason before age 60 will usually trigger a 25% withdrawal charge. Because that charge applies to the bonus as well as your own contributions, you can receive back less than you originally paid in.
So the bonus is valuable, but it works best when the money really is intended for an eligible first home or later life.
The Mortgage Guarantee Scheme
The permanent Mortgage Guarantee Scheme, sometimes referred to as Freedom to Buy, supports lenders offering mortgages between 91% and 95% loan to value.
For a £200,000 home, a 95% mortgage would mean borrowing £190,000 and providing a £10,000 deposit.
The government guarantee is provided to the lender. It does not pay part of your mortgage and it does not guarantee that your application will be accepted. Your income, existing commitments, credit history and the affordability of the repayments still matter.
This is an important distinction if your deposit is the problem. A 5% mortgage might reduce the amount you need before buying, but it also means borrowing more of the property’s value. That can affect the interest rate, monthly payment and total amount you repay.
Getting through the front door sooner and having the lowest possible mortgage are not necessarily the same goal.
First Homes in England
First Homes takes a different approach. Instead of helping with the deposit, it reduces the price of certain properties.
Eligible first-time buyers can purchase qualifying homes at a discount of between 30% and 50% from their market value. A home worth £300,000 with a 30% discount would therefore be bought for £210,000. You own the whole property rather than paying rent on an unowned share.
There are income limits and other eligibility rules, and local councils can add their own criteria. The biggest practical limitation is that the scheme only applies to homes offered through First Homes. It is not a discount you can apply to any property you find.
The discount also remains attached to the property, so when it is sold it normally needs to be passed on to another eligible buyer.
Shared Ownership and shared equity
Shared Ownership can reduce the amount of a property you need to buy initially.
In England, you buy a share of the home and normally pay rent to a housing provider on the part you do not own. Your deposit is usually based on the value of your share rather than the full value of the property.
For example, if a home is worth £240,000 and you buy a 25% share, the share costs £60,000. A 5% deposit on that share would be £3,000.
That makes the initial deposit much smaller, but £3,000 does not describe the full cost of living there. You may have a mortgage payment, rent on the remaining share and service charges. There can also be costs involved if you buy additional shares later.
This is a good example of why the smallest deposit is not necessarily the cheapest option overall. The scheme changes how you buy the home, so it makes sense to look at the ongoing costs as well as what you need on day one.
Scotland and Wales also have shared equity and ownership schemes with their own rules. Scotland’s current routes include the First Homes Fund and Open Market Shared Equity. Wales has Help to Buy Wales, Homebuy Wales and Shared Ownership Wales. In Northern Ireland, Co-Ownership allows eligible buyers to purchase part of a property and pay rent on the remaining share.
The details vary considerably, which makes location one of the first things to establish before building a plan around any of them.
First-time buyer tax relief
Government help can also reduce some of the other cash needed to complete a purchase.
In England and Northern Ireland, eligible first-time buyers currently receive Stamp Duty Land Tax relief on qualifying homes costing £500,000 or less. There is no SDLT on the first £300,000, with 5% charged on the portion between £300,000 and £500,000.
Scotland has separate Land and Buildings Transaction Tax relief for eligible first-time buyers. Wales uses Land Transaction Tax and does not currently have a separate first-time buyer relief.
These reliefs do not make a lender willing to offer you a larger mortgage. Their value is that they can reduce another upfront cost, leaving less cash to find before completion.
The same buyer can get very different kinds of help
Imagine a first-time buyer has £12,000 saved and is trying to buy in an area where suitable homes cost around £240,000.
A standard 5% deposit would be £12,000, so a 95% mortgage could potentially solve the deposit problem. If some of those savings had been built through a Lifetime ISA, the government bonus may already have helped them reach that point sooner.
A qualifying First Home could change the property price itself. Shared Ownership could mean buying only part of the £240,000 property initially, reducing the mortgage and deposit needed, but introducing rent and possibly service charges.
All of those routes can make buying more achievable. They just do it in different ways.
The effect on the buyer’s finances afterwards can also be very different. One route might leave them with a larger mortgage. Another could mean mortgage and rent payments together. Another may restrict which homes they can buy or how the property is sold later.
This is why it helps to look beyond the headline benefit of a scheme and understand what changes once you use it.
Can different schemes be combined?
Sometimes.
An eligible buyer may, for example, be able to use Lifetime ISA savings towards the deposit and also qualify for the relevant first-time buyer property tax relief.
Other combinations are restricted. The Mortgage Guarantee Scheme cannot be used with Shared Ownership or shared equity purchases, and individual regional schemes can have their own rules about what can be combined.
Before relying on two forms of support together, check the current rules for both. The mortgage, property and schemes all need to work together.
Work out what the scheme changes for you
Government support can make a real difference, but the most suitable route depends partly on what is making home ownership difficult in the first place.
If you have enough income to support a mortgage but the deposit feels out of reach, a Lifetime ISA or low-deposit mortgage may help. If local prices are the bigger problem, a discounted purchase or shared ownership route may change what is accessible. If you already have the deposit but are worried about the total cash needed, tax relief may be more relevant.
Then look at the position after you buy. Include the mortgage, any rent or service charges, the cash you will have left and the other things you still need your money to cover.
MoneyAngel can help you build your house deposit in My Goals and see it alongside the rest of your financial plans. That makes it easier to understand not only whether a particular route could help you buy, but how getting there might affect everything else you are working towards.
Important information
This article is for general information only and is not financial advice. It does not take account of your individual needs, objectives or circumstances. If you need advice about your own situation, speak to a suitably qualified professional.