First-Time Buyer Loan Scheme to Cap Household Income at £140,000

Households earning up to £110,000 will be eligible for the government's new first-time buyer loan scheme — and the cap rises to £140,000 for purchases in London, The Times first reported.

The Your First Home scheme will offer government-backed equity loans worth 20% of new-build properties bought from participating developers. The loans come with an initial interest-free period. They're designed to let people buy with deposits as low as 2.5%.

That's a sharp break from every previous first-time buyer programme. Earlier schemes imposed no income test at all — and drew criticism for inflating house prices by letting relatively wealthy households borrow more.

Salary caps and the rest of the fine print will be confirmed at next week's Budget.

Why the caps landed where they did

Ministers originally set the limits far lower: £90,000 outside London and £110,000 in the capital, according to The Times. They concluded that would shut out too many middle-earning couples — teachers and nurses were the cited examples — and raised both thresholds by £20,000.

Unveiling the scheme at last month's Labour conference, Prime Minister Andy Burnham said it would focus on those who "really need support". The income caps are the mechanism for delivering on that promise.

For context, a £110,000 household cap sits well above the UK median household income, meaning a large share of two-earner professional couples still qualify. The London figure of £140,000 recognises that median prices in the capital swallow far more of a comparable salary.

How it compares with Help to Buy

The structure borrows heavily from Help to Buy, the equity-loan scheme launched under the Conservative-Liberal Democrat coalition. The original version ran from 2013 to 2021 and let all purchasers — not just first-time buyers — put a 5% deposit on a new-build worth up to £600,000. The government funded up to 20% of the cost through a shared equity loan, interest-free for the first five years.

A second version ran from 2021 to 2023. It restricted access to first-time buyers and applied regional price caps to the properties that could be bought.

The new scheme tightens the targeting further: income limits replace price caps as the gating mechanism. The equity loans remain linked to changes in the value of the properties they're used to buy — so the government's stake rises and falls with the market, just as under Help to Buy.

What does this change for buyers and developers?

For buyers, the practical shift is twofold. Deposits drop to as little as 2.5%, against the 5% minimum under Help to Buy, and the initial interest-free period lowers early carrying costs. But eligibility now hinges on household income, so higher-earning couples who qualified under the old schemes are out.

For developers, participation brings a cost: builders taking part will be asked to contribute towards the scheme's running costs. In exchange, they get a pipeline of deposit-constrained buyers for new-build stock specifically — existing homes don't qualify.

The government frames the scheme partly as a housebuilding lever. Ministers have conceded they're set to miss their target of building 1.5 million homes in England by the next election, and a guaranteed demand channel for new-builds is intended to pull construction forward.

The funding question the Budget must answer

Labour says the scheme will be funded within existing government budgets. It hasn't said which other spending areas will be cut to pay for it. That detail — alongside the confirmed salary caps — lands at next week's Budget, and it will determine whether the scheme scales or stays a niche offering.

Until then, the headline numbers are these: 20% equity loans, 2.5% minimum deposits, £110,000 income caps, £140,000 in London, new-builds only.