First-Time Buyer Schemes in the UK

The UK offers several government schemes designed to help first-time buyers onto the property ladder — Lifetime ISAs, Shared Ownership, the Mortgage Guarantee Scheme, and various regional or scheme-specific successors to Help to Buy. Each has eligibility rules, caps, and trade-offs. This guide unpacks them.

Lifetime ISA (LISA)

The Lifetime ISA was introduced in April 2017 to help first-time buyers and the self-employed save for either a first home or retirement. Anyone aged 18 to 39 can open one. The contributor pays in up to £4,000 a year, the government adds a 25% bonus on each contribution, and the combined balance can be withdrawn tax-free for a first-home purchase (subject to a property-price cap currently set at £450,000) or for retirement after age 60.

The 25% bonus is the headline feature: £4,000 contributed becomes £5,000 after the bonus, which compounds tax-free inside the LISA wrapper. Over five years of maximum contributions, a single buyer can accumulate roughly £33,000 (including bonus and investment growth) toward a deposit; a couple, double that.

The £450,000 price cap is fixed in cash terms and has not risen since 2017 despite material house-price inflation, so in London and the South East a meaningful share of first-time-buyer properties now sits above the cap and is therefore not LISA-eligible. Withdrawals for non-qualifying purposes attract a 25% penalty — effectively recouping the government bonus and a small additional charge. Plan with care.

Shared Ownership

Shared Ownership is a tenure model in which the buyer purchases an initial share of a property (typically 25% to 75%) from a housing association or other registered provider, and pays rent on the remainder. Over time the buyer can "staircase" to higher shares, eventually owning the property outright in many cases.

The scheme is particularly powerful in expensive metros where outright purchase is impossible on a normal first-time-buyer income. The deposit and the mortgage are sized against the share being purchased, not the full property value, so the financial commitment is materially smaller at entry.

The trade-offs are real. Service charges and ground rents on shared-ownership properties are typically higher than freehold equivalents. Selling a shared-ownership flat is more complex — the housing association usually has first refusal, and the marketing is constrained to other eligible buyers. Staircasing to higher shares depends on the property’s current valuation, which can rise sharply between staircase steps. Read the lease and the staircasing rules with full attention.

Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme, originally launched in April 2021 and renewed several times since, gives lenders a Treasury-backed guarantee on the portion of a mortgage above 80% LTV. It was designed to incentivise lenders to keep offering 95% LTV mortgages — which were withdrawn en masse in 2020 — and has been extended through 2026.

For the borrower, the scheme is largely invisible. You apply for a 95% LTV mortgage as normal; the lender chooses whether to draw the Treasury guarantee. The headline benefit is structural: more 95% LTV products available, more competitive pricing on them, and steadier availability through market stress. The scheme matters most when the broader market is contracting — without it, low-deposit mortgages would be the first product type to disappear in a downturn.

Eligibility is broad: any first-time buyer or existing homeowner buying a primary residence priced at £600,000 or less qualifies, provided the lender participates. As of mid-2026 most large UK lenders participate.

Successors and regional schemes

Help to Buy: Equity Loan, the flagship scheme of the previous decade, closed to new applicants in March 2023. Existing Help to Buy loans continue and their repayment terms are unchanged.

Successor schemes are smaller and tend to be regional. The First Homes scheme (England) requires new-build developers to make a portion of homes available at a discount (typically 30%) to local first-time buyers. The Help to Buy: Equity Loan Wales (separate from the English scheme) remains active. Scotland operates the Open Market Shared Equity scheme. Northern Ireland has the Co-Ownership Housing Association, which functions similarly to Shared Ownership.

Local authorities and housing associations also publish their own schemes, often tied to new developments. These can be the most valuable single intervention but are typically location-specific and time-bounded. Local searches before any first-home purchase are worthwhile.

Combining schemes

Schemes can typically be combined. The most common stack is a Lifetime ISA used for the deposit, a Mortgage Guarantee Scheme the highest LTV tier LTV mortgage, and (where applicable) a First Homes discount. Shared Ownership purchasers commonly also use a Lifetime ISA for the deposit on their initial share.

There are limits. The £450,000 LISA cap applies regardless of share size — if the full open-market value of a Shared Ownership property exceeds £450,000, the LISA cannot be used even if your share value is below the cap. The First Homes discount can be combined with most schemes but only on First Homes-eligible new builds.

Stamp Duty Land Tax operates on a separate first-time-buyer relief: the first £425,000 of purchase price is exempt for first-time buyers, with reduced rates up to £625,000. Above £625,000 the relief is lost entirely, and standard SDLT applies on the full price. See our SDLT guide for full detail.

Frequently asked questions

UK mortgage rate snapshot — selected LTV bands

"The Bank of England Bank Rate sets the floor for UK mortgage pricing — but lender margins, LTV-band step-ups, and Affordability Test arithmetic determine the actual rate you pay."