New Modelling Adds a Purchase-Budget Comparison
This updates Willow's original coverage of the 26 September announcement. The scheme remains a proposal awaiting detailed rules; the new information is an assessment of how its funding structure could change the homes within reach of a single buyer.
Rightmove estimates that Your First Home could increase the number of currently available new-build homes affordable to an average solo first-time buyer in England by 114%. Its model raises the maximum purchase price from £216,758 to £265,703, while reducing the cash deposit from £10,838 to £6,643.
That is a potentially significant change for someone trying to buy on one income. The government-backed equity loan would supply part of the purchase funding that would otherwise need to come from savings or a larger mortgage. It could address a borrowing-capacity constraint as well as the deposit barrier.
It does not establish that a particular buyer will qualify, that a chosen development will participate, or that the scheme will offer the lowest long-term cost. The useful next step is to compare the proposed structure with the buyer's actual alternatives, then revisit that comparison once the full terms are published.
What Is Behind the Rightmove Figures?
The assumed mortgage limit is 4.5 times earnings. The national calculation uses England average earnings and compares a 5% deposit with a 95% mortgage against a 2.5% deposit, 20% equity loan and 77.5% mortgage.
The analysis is an early indication. It examines current listings using assumed borrowing capacity. Eligibility, local caps, participating developers and lender assessments can change the outcome.
The Mortgage Limit Stays the Same, the Funding Mix Changes
The most revealing part of the comparison is the mortgage amount. Applying 95% to the conventional purchase price gives a mortgage of approximately £205,920. Applying 77.5% to the proposed scheme purchase price gives almost exactly the same mortgage amount.
In other words, the model does not assume that the lender suddenly advances more against the same salary. It holds assumed mortgage capacity broadly constant and adds another source of finance. This allows the buyer to consider a higher purchase price without increasing that modelled mortgage balance.
The difference is funded principally by an additional obligation. At the modelled scheme purchase price, a 20% equity loan would initially amount to approximately £53,141. That must sit alongside the mortgage when assessing future costs and repayment arrangements. A larger purchase budget is useful, but it should not be mistaken for a reduction in total purchase financing.
| Rightmove Model | Conventional Route | Proposed Scheme Route |
|---|---|---|
| Maximum purchase price | £216,758 | £265,703 |
| Buyer deposit | £10,838 at 5% | £6,643 at 2.5% |
| Mortgage share | 95% | 77.5% |
| Government-backed equity loan | None | 20% |
| Mortgage amount calculated from these prices | Approximately £205,920 | Approximately £205,920 |
The rounded mortgage amounts above are Willow's arithmetic using the published model. They are not mortgage offers and do not include fees. The comparison also involves two different purchase prices; it is not a payment comparison for the same home.
What the Government Has Announced
The Ministry of Housing, Communities and Local Government announced Your First Home on 26 September. It is expected to support deposits of 2.5% alongside government-backed equity loans of 20%, for first-time buyers purchasing eligible new builds in England from developers signed up to the scheme.
An initial interest-free period has been announced. Household-income limits and local property-price caps are also planned, with participating developers expected to contribute towards the scheme's costs. The detailed costs and implementation timetable are due to be set out at the Budget on 28 October.
Those remaining details are central to the decision. A buyer can have sufficient income for the proposed mortgage but fall outside an income cap. A property can look affordable under the model but exceed the local price limit. The intended completion date may also arrive before the scheme becomes operational.
The Budget Announcement Will Not Necessarily Be the Launch Date
Confirmation of a policy and availability of an application route are separate stages. Until the timetable and participating organisations are known, buyers should not treat the scheme as committed funding for a reservation or exchange deadline.
The Deposit Is Only Part of the Cash Requirement
A lower deposit can bring a purchase forward, especially for someone paying rent while saving alone. The buyer still needs to account for legal fees, surveys, mortgage charges, moving expenses and any applicable transaction tax, as well as money retained for life after completion.
A useful readiness assessment therefore begins with total cash available rather than the deposit percentage alone. It should establish which costs must be paid before completion, how much remains afterwards and whether the household could manage an unexpected expense.
Reducing the deposit can preserve savings, which may be valuable. It can also encourage a buyer to stretch the purchase price. Those are different outcomes: the first improves liquidity, while the second increases the size of the overall commitment. The appropriate balance depends on the buyer's plans.
The Equity Loan Needs Its Own Cost and Repayment Assessment
An initial interest-free period is not the same as a grant. The equity loan would remain an obligation alongside the mortgage, and the buyer needs to understand what happens when the free period ends.
The duration, subsequent charges and repayment formula have not yet been confirmed. Buyers should not import the rules of an earlier government scheme into this one. If repayment is linked to a share of future property value, a rise in value could increase the amount required to redeem it. That remains a scenario to assess once the documentation is available, rather than a confirmed Your First Home term.
The cost comparison should cover the expected period of ownership. It needs to consider the initial mortgage payment, any later equity-loan charges and the amount required when selling or repaying the support. A structure that is comfortable at the outset must also be manageable when those obligations change.
A 95% or 98% Mortgage May Solve a Different Problem
A conventional high loan-to-value mortgage can help a buyer with limited savings purchase without a separate government equity loan. However, it does not automatically solve an income-based borrowing gap. Financing a larger share of the same property through the mortgage increases the amount that must pass the lender's affordability assessment.
There are current alternatives worth examining. Cambridge Building Society has announced wider intermediary access to its First Step mortgage, offering up to 98% loan-to-value for eligible first-time buyers. Its announcement includes new-build houses, subject to criteria. That is a specific lender option, not evidence that every buyer or new-build property can obtain 98% finance.
The distinction is practical. A buyer who can support the larger mortgage but lacks cash may find a conventional low-deposit route suitable. A buyer whose mortgage capacity is the limiting factor may gain more from an additional source of purchase finance. The scheme's final eligibility and costs will determine whether that potential benefit is available and worthwhile.
| Route | Potential Benefit | Key Comparison |
|---|---|---|
| Proposed Your First Home | A smaller buyer deposit and a lower mortgage share of the purchase price. | Eligibility, equity-loan costs, repayment rules, property restrictions and launch timing. |
| 95% mortgage | Purchase with a 5% deposit without the scheme equity loan. | Affordability of the larger mortgage, available rates, fees and property criteria. |
| 98% mortgage where available | A smaller deposit through a specific lender's product. | Product eligibility, borrowing limits, monthly cost and exposure to a fall in value. |
| Family-assisted route | Family support may help with deposit or borrowing capacity, depending on the structure. | The supporter's obligations, security, access to funds and independent advice. |
Monthly Payments Must Be Compared on the Same Purchase
Comparing the model's two maximum purchase prices does not show which route is cheaper for a particular home. A proper comparison should hold the target property price constant, then calculate the deposit, mortgage balance, rate, fees and additional obligations under each available route.
Term also matters. Extending repayment over more years may reduce the monthly mortgage payment while increasing total interest. The equity loan's initial free period can improve early cash flow, but the assessment must consider what follows it.
The relevant question is whether the combined borrowing fits a sustainable household budget. Choosing the smallest first payment without understanding later costs can simply move the affordability problem into the future.
Plan the Remortgage and Sale Before Choosing the Structure
A buyer may later want to change mortgage lender, move home, repay the equity loan or retain it while refinancing. Each option will depend on the scheme documentation and the relevant lender's requirements.
For a solo buyer expecting their circumstances to change, flexibility may carry substantial value. A possible relocation, a future joint purchase or a need for more space should inform the expected ownership period. Purchase costs and the process of settling the equity loan can matter particularly when a move happens sooner than planned.
These questions do not make the proposed scheme unsuitable. They help establish whether it fits the buyer's likely use of the property, rather than merely enabling the initial purchase.
New-Build Choice Still Depends on the Actual Development
More listings within a modelled price range do not mean every listing will become a qualifying opportunity. Developer participation, the final caps and lender acceptance still need to align for the particular home.
Buyers should also assess the full property proposition: purchase price, specification, service or estate charges, warranty, location and likely resale market. Incentives should be disclosed and checked against lender and scheme rules once those are available.
A smaller deposit does not establish that a home is fairly priced or suitable for the intended ownership period. It changes access to finance; the property still needs to stand up to normal valuation and legal scrutiny.
What Buyers Can Do Before 28 October
Preparation can make the post-Budget comparison more useful. It cannot establish eligibility in advance. Buyers should avoid contractual commitments that depend on unconfirmed support and ask their solicitor to explain reservation terms and any non-refundable payments.
How Willow Private Finance Can Help
Willow can assess the buyer's current mortgage options and identify whether the main constraint is savings, borrowing capacity, property eligibility or a combination of these. That gives the proposed scheme a meaningful benchmark.
Once the final rules are published, we can assess eligibility and compare the combined cost and practical implications with appropriate alternatives. The aim is to identify a workable purchase structure that fits the household's finances and future plans.
Would the Scheme Change What You Can Buy — or Is Another Route Already Available?
If you are buying alone or have a small deposit, establish your current borrowing position now. The final Your First Home rules can then be compared with suitable low-deposit mortgage options using your actual budget.
Compare First-Time Buyer Mortgage Options →Frequently Asked Questions
Practical questions about the proposed scheme and the new affordability modelling.
Can I apply for Your First Home now?
The announcement does not provide an application opening date. Eligibility, costs and implementation timing remain unconfirmed, with further details expected at the 28 October Budget. Preparing a mortgage assessment now does not establish scheme eligibility.
Does Rightmove's analysis mean my mortgage borrowing limit increases?
Not necessarily. Its model uses the same assumed mortgage borrowing capacity in both routes. The equity loan supplies part of the purchase funding, allowing that mortgage capacity to support a higher property price. Actual borrowing still depends on lender assessment.
Is the 20% government-backed equity loan free money?
No. It is a loan alongside the mortgage. An initial interest-free period has been announced, but its duration, later charges and repayment rules still need confirmation. Buyers should not assume the terms will match a previous government scheme.
Would a 95% or 98% mortgage be better than Your First Home?
It depends on eligibility, available products and the final scheme terms. A conventional mortgage avoids the scheme equity loan but generally requires a larger mortgage balance for the same home. Compare deposit, payments, fees, future repayment obligations and flexibility.
Will every new-build home qualify?
No. The proposed scheme is for eligible new builds in England from participating developers. Local property-price caps and household-income limits are planned, but the thresholds and detailed rules have not yet been published.