Help to Buy Scheme vs First Homes Scheme: Which Is Better in 2026?
Dreaming of stepping onto the UK property ladder in 2026? As the Help to Buy scheme comes to an end, the First Homes Scheme is becoming increasingly significant. It is crucial to compare these options to determine which government support aligns best with your financial capabilities, lifestyle preferences, and long-term objectives. This article will guide you through the essential aspects of both schemes, helping you make an informed decision about your homeownership journey in 2026.
Buying your first home is a significant milestone, and government schemes can provide valuable support in achieving this goal. In 2026, prospective homeowners in the UK have access to schemes designed to reduce financial barriers and make property ownership more attainable. Two of the most discussed options are the Help to Buy Scheme and the First Homes Scheme. While both offer assistance, they cater to different needs and circumstances. This article explores each scheme in detail, compares their key features, and helps you determine which might be the right fit for your homeownership journey.
Overview of Help to Buy Scheme in 2026
The Help to Buy Scheme was introduced to assist buyers in purchasing newly built homes with a smaller deposit. Although the equity loan component of the scheme closed to new applications in England in 2023, some buyers who secured loans before the deadline may still be managing their agreements in 2026. The scheme provided an equity loan of up to 20 percent of the property value, or up to 40 percent in London, with buyers required to contribute a minimum 5 percent deposit and secure a mortgage for the remaining amount.
For those still within the scheme, repayments on the equity loan begin in the sixth year, with fees based on the current market value of the property. Homeowners can repay the loan in full or in part at any time, though early repayment terms apply. While new applicants can no longer access this scheme, understanding its structure remains relevant for those navigating existing agreements or considering similar future initiatives.
Understanding the First Homes Scheme for 2026
The First Homes Scheme continues to operate in 2026, offering a discount of at least 30 percent on the market value of newly built homes for eligible first-time buyers. Local authorities have the flexibility to increase this discount to 40 or 50 percent, depending on regional affordability challenges. The scheme applies to homes in England, with specific eligibility criteria and price caps varying by location.
Buyers must be first-time purchasers, aged 18 or over, and able to secure a mortgage covering at least half of the discounted purchase price. The property must be the buyer’s primary residence, and resale restrictions ensure the discount is passed on to future eligible buyers. This scheme aims to create long-term affordability in the housing market while supporting local communities.
Key Differences: Eligibility and Benefits Compared
When comparing these schemes, several key differences emerge. The Help to Buy Scheme, in its active years, was available to both first-time buyers and existing homeowners purchasing a new-build property. In contrast, the First Homes Scheme is exclusively for first-time buyers. Eligibility for the First Homes Scheme also includes income caps, typically set at £80,000 per year outside London and £90,000 in the capital, though local authorities may adjust these thresholds.
The financial structure differs significantly. Help to Buy provided an equity loan that required repayment based on property value, whereas the First Homes Scheme offers a permanent discount on the purchase price, reducing the upfront cost without creating a loan obligation. However, the discount under the First Homes Scheme is tied to the property in perpetuity, meaning future sales must also offer the discount to eligible buyers.
Geographic availability is another distinction. The Help to Buy Scheme operated across the UK with regional variations, while the First Homes Scheme is specific to England. Buyers in Scotland, Wales, and Northern Ireland must explore alternative regional schemes tailored to their local markets.
Impact on Property Choices and Locations
Both schemes influence the types of properties and locations available to buyers. The Help to Buy Scheme applied exclusively to new-build homes, often in developments designed to meet scheme criteria. This limited choice to newly constructed properties, which may not suit buyers seeking older homes or properties in established neighborhoods.
The First Homes Scheme similarly focuses on new-build properties but introduces local flexibility. Councils can prioritize key workers, such as teachers or healthcare professionals, and set additional criteria to address community needs. This localized approach means availability and discounts vary significantly across regions, with some areas offering more opportunities than others.
Location also affects price caps under the First Homes Scheme. Maximum purchase prices are set regionally, ensuring the scheme targets genuinely affordable properties. Buyers in high-cost areas may find fewer options within the cap, while those in more affordable regions benefit from greater choice.
Cost and Financial Considerations: A Practical Comparison
Understanding the financial implications of each scheme is essential for making an informed decision. While the Help to Buy Scheme required managing an equity loan with future repayments, the First Homes Scheme reduces the initial purchase price, impacting mortgage requirements and long-term affordability.
For example, a property valued at £250,000 under the First Homes Scheme with a 30 percent discount would cost £175,000. With a 10 percent deposit of £17,500, the buyer would need a mortgage of £157,500. Under the Help to Buy Scheme, the same property might have required a 5 percent deposit of £12,500, a 20 percent equity loan of £50,000, and a mortgage of £187,500. Over time, the equity loan would accrue fees and require repayment, potentially increasing overall costs.
| Scheme | Property Value | Discount/Loan | Buyer Deposit | Mortgage Required | Long-Term Cost Considerations |
|---|---|---|---|---|---|
| Help to Buy Scheme | £250,000 | 20% equity loan (£50,000) | £12,500 (5%) | £187,500 | Equity loan fees from year 6, repayment based on market value |
| First Homes Scheme | £250,000 | 30% discount (£75,000) | £17,500 (10%) | £157,500 | No loan repayment, but resale discount applies |
Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.
Which Scheme Suits Your Homeownership Goals?
Choosing between these schemes depends on individual circumstances, financial capacity, and long-term plans. The Help to Buy Scheme, where still applicable, may have suited buyers seeking lower initial deposits and willing to manage future loan repayments. However, with the scheme closed to new applicants, this option is no longer available for most buyers in 2026.
The First Homes Scheme offers a viable alternative for first-time buyers meeting eligibility criteria. The permanent discount reduces upfront costs and ongoing financial obligations, making it attractive for those planning to remain in the property long-term. However, resale restrictions may limit flexibility for buyers anticipating future moves or property upgrades.
Buyers should also consider regional availability, property type preferences, and income eligibility. Consulting with a mortgage advisor and researching local authority schemes can provide tailored guidance based on specific circumstances.
Ultimately, both schemes reflect efforts to address housing affordability challenges in the UK. While the Help to Buy Scheme played a significant role in previous years, the First Homes Scheme represents the current focus for supporting first-time buyers. Evaluating your financial situation, property goals, and eligibility for available schemes will help you make the best decision for your homeownership journey in 2026.
