First Homes scheme explained

Buying your first home can feel difficult when property prices, deposit savings and mortgage affordability all need to line up. The First Homes scheme is designed to help some eligible first-time buyers in England purchase a home at a discount to its market value.

Under the scheme, eligible buyers may be able to buy a home for 30% to 50% less than its market value. The home must usually be your only or main residence, and local eligibility rules may also apply.

The key point is that First Homes is not a cash bonus or deposit contribution. Instead, the property is sold at a reduced price, which can lower the mortgage amount needed and make the purchase feel more achievable.

How the First Homes scheme works

The First Homes scheme helps eligible buyers purchase a home for less than its full market value. The discount is usually at least 30%, although some areas may offer a larger discount.

Because you buy at a lower price, you may need to borrow less. Your deposit may also be lower because it is usually based on the discounted purchase price rather than the full market value.

However, the discount does not disappear after you buy. When you sell the property in the future, the same percentage discount is passed on to the next eligible buyer.

That means you may buy the home for less, but you also sell it under the First Homes rules later.

How the First Homes scheme works

A First Homes discount can reduce the purchase price, deposit needed and mortgage required. The example below shows how the numbers could work on a discounted home.

A higher LTV gives the lender less equity buffer, so criteria can be stricter than at lower LTVs. Learn more: Loan-to-value explained.

The discount is retained when the home is sold in the future, so the next eligible buyer receives the same percentage discount.

This is only a simplified example. Your actual mortgage and deposit will depend on the property price, discount level, lender criteria, income, credit profile and wider affordability.

Who is the First Homes scheme for?

To use the First Homes scheme, you usually need to be at least 18, buying your first home and able to get a mortgage for at least half of the discounted purchase price.

Income limits also apply. Your household income must usually be no more than £80,000 a year before tax, or £90,000 in London.

If you are buying with someone else, all buyers normally need to be first-time buyers. Local rules may also apply, and some councils may prioritise people who live or work in the area, key workers or buyers within certain income limits.

For a wider guide to buying your first home, read our guide to first-time buyer mortgages.

What types of homes are available through First Homes

First Homes can include new homes built by developers. They can also include resale homes, where a previous owner originally bought through the scheme and is now selling to another eligible buyer.

This means First Homes is not only about brand-new properties. However, availability can be limited, and not every development or local area will have First Homes available.

On the first sale, the discounted price must be no higher than £250,000, or £420,000 in Greater London. Local authorities can also set lower price caps where needed.

Because First Homes are tied to local rules and planning agreements, it is worth checking the property details early. The home may look similar to other properties on the same development, but the legal structure and resale conditions are different.

For more on buying a newly built home, see our guide to new build mortgages.

Benefits and things to consider

First Homes can make buying feel more achievable by reducing the purchase price and the mortgage amount you may need. However, the scheme also comes with rules and resale conditions, so it is worth looking at both sides before deciding whether it fits your plans.

Even if the discount looks attractive, the wider arrangement still needs to work for your budget, moving plans and long-term affordability. A lower purchase price can help, but you should still check the mortgage, legal structure and resale rules carefully.

To see what lenders may check before approving you, read our guide to what lenders look for in a mortgage application.

First Homes vs Shared Ownership

First Homes and Shared Ownership both aim to make buying more accessible, but they work in very different ways.

With First Homes, you buy the property at a discounted price. You do not pay rent on an unowned share. However, the discount stays attached to the property when you sell.

With Shared Ownership, you buy a share of the property and pay rent on the remaining share. Your deposit may be lower because it is based on the share you buy, but you need to budget for mortgage payments, rent, service charges and other costs.

One route is not automatically better than the other. First Homes may suit buyers who want to own the whole property at a discounted price. Shared Ownership may suit buyers who cannot afford the full property purchase, even with a discount.

For more on buying through part buy, part rent, see our guide to shared ownership mortgages.

First Homes vs 95% mortgages

First Homes and Shared Ownership both aim to make buying more accessible, but they work in very different ways.

With First Homes, you buy the property at a discounted price. You do not pay rent on an unowned share, but the discount usually stays attached to the property when you sell.

With Shared Ownership, you buy a share of the property and pay rent on the remaining share. Your deposit may be lower because it is based on the share you buy, but you also need to budget for rent, service charges and other costs alongside the mortgage.

One route is not automatically better than the other. First Homes may suit buyers who want to own the whole property at a discounted price, while Shared Ownership may suit buyers who cannot afford the full property purchase, even with a discount.

To see how buying with a smaller deposit works, read our guide to 5% deposit mortgages.

The discount is only part of the decision

The First Homes scheme can make buying feel more achievable, especially if full market prices are out of reach. A lower purchase price may reduce the mortgage needed and make the deposit feel more manageable.

However, the scheme should still fit the bigger picture. It is important to check the property, mortgage, local rules, resale restrictions and long-term affordability before deciding whether it is the right route.

A discounted home can be valuable, but only if the full arrangement works for your finances, your plans and the way you expect to use the property in future.

How Muttuo Mortgages can help

Muttuo Mortgages can help you understand whether the First Homes scheme may fit your buying plans.

That might include checking how the discounted price affects your deposit, reviewing lender criteria, comparing monthly payments and helping you understand what documents may be needed before you apply.

As a whole-of-market mortgage broker, Muttuo can also help you compare First Homes with other first-time buyer routes, such as Shared Ownership, 95% mortgages, gifted deposits or buying with another person.

The aim is to help you move from a rough idea of what might be possible to a clearer mortgage plan, so you can understand your options before committing to a property.