Help to Buy Scheme vs First Homes Scheme: Which Is Better in 2026?

The journey to homeownership in the United Kingdom has become increasingly complex, particularly for first-time buyers facing rising property prices and stringent mortgage requirements. Government schemes have emerged as vital tools to bridge the gap between aspiration and reality, offering financial support and reduced barriers to entry. Two prominent programmes currently available are the Help to Buy Scheme and the First Homes Scheme, each designed with different mechanisms and target audiences in mind.

Understanding the structure, benefits, and limitations of these schemes is crucial for anyone considering their first property purchase. While both aim to facilitate homeownership, they operate through different models and serve slightly different demographics. This article examines the key features of each programme, helping prospective buyers determine which option may better suit their circumstances in 2026.

What Are the Schemes and Who Qualifies?

The Help to Buy Scheme, which has undergone several iterations since its introduction, primarily operates through equity loans that enable buyers to purchase new-build properties with smaller deposits. Eligibility typically requires first-time buyer status, with income caps and property price limits varying by region. The scheme allows purchasers to secure a government loan covering a percentage of the property value, reducing the amount needed for a mortgage.

The First Homes Scheme takes a different approach by offering newly built homes at a discount of at least 30 percent below market value. This discount remains attached to the property in perpetuity, ensuring affordability for future buyers as well. Eligibility criteria include first-time buyer status, household income restrictions, and the requirement that the property serves as the buyer’s principal residence. Local connection requirements may also apply in certain areas, prioritising residents with existing ties to the community.

Both schemes impose restrictions on the types of properties available and the maximum purchase prices, which are adjusted according to regional market conditions. Prospective buyers must meet specific criteria related to income, residency, and purchase intentions to qualify for either programme.

Financial Benefits: Grants, Discounts and Limits

The financial mechanisms underlying these schemes differ significantly, impacting both immediate affordability and long-term costs. Under the Help to Buy Scheme, the government provides an equity loan of up to 20 percent of the property value in England, or up to 40 percent in London. This loan is interest-free for the first five years, after which interest charges apply at an escalating rate tied to inflation. Buyers must provide a minimum deposit of 5 percent and secure a mortgage for the remaining balance.

The First Homes Scheme offers a straightforward discount model, with properties sold at a minimum of 30 percent below market value. This discount can be increased to 40 or 50 percent at the discretion of local authorities. Unlike the equity loan model, there is no government loan to repay, meaning buyers avoid future interest charges associated with the Help to Buy Scheme. However, the discount must be passed on when the property is sold, maintaining affordability for subsequent purchasers.

Price caps apply to both schemes, ensuring they target genuinely affordable properties. For Help to Buy, regional price caps range from £186,100 in the North East to £600,000 in London. First Homes price caps after the discount are set at £250,000 nationally, with a higher cap of £420,000 in London. These limits reflect regional variations in property values and aim to keep the schemes accessible to those with moderate incomes.

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.

Navigating the Homebuying Process in 2026

The application and purchasing processes for these schemes involve distinct steps and requirements. For Help to Buy, buyers must first secure an agreement in principle from a participating mortgage lender, then reserve a property with a registered housebuilder. The equity loan application is submitted through the scheme administrator, and upon approval, the purchase proceeds with legal conveyancing and final mortgage arrangements.

The First Homes Scheme requires buyers to work with local authorities or housing associations to identify eligible properties. Buyers must provide evidence of eligibility, including proof of first-time buyer status, income documentation, and any required local connection evidence. Once approved, the purchase follows standard conveyancing procedures, with the discount recorded as a legal restriction on the property title.

Both schemes necessitate working with approved developers and lenders, which can limit choice compared to the open market. Buyers should also consider the implications of resale restrictions, particularly with First Homes, where the discount must be passed on to future buyers, potentially affecting property appreciation benefits.

Location Matters: Availability Across the UK

Geographical availability varies significantly between the two schemes, influencing which option is viable for buyers in different regions. The Help to Buy Scheme operates across England, with specific regional price caps reflecting local market conditions. The scheme is not available in Scotland, Wales, or Northern Ireland, where separate homeownership initiatives exist.

The First Homes Scheme is also England-specific, but its implementation depends heavily on local authority participation and the availability of suitable new-build developments. Some areas have embraced the scheme more enthusiastically than others, resulting in uneven distribution of First Homes properties. Rural and high-demand areas may offer fewer opportunities under either scheme due to limited new-build activity.

Prospective buyers should research availability in their target locations, as the concentration of new developments and local policy decisions directly impact access to these programmes. Urban areas with active regeneration projects tend to offer more opportunities, while rural regions may have limited options.

Making the Right Choice for Your Circumstances

Deciding between the Help to Buy Scheme and the First Homes Scheme depends on individual financial circumstances, long-term plans, and property preferences. Help to Buy may suit buyers who can afford slightly higher property values and prefer the flexibility of a larger equity loan, despite future interest charges. The scheme offers access to a broader range of new-build properties, particularly in higher-value regions.

The First Homes Scheme appeals to those seeking straightforward affordability without the complexity of government loan repayments. The permanent discount model benefits buyers planning to remain in their property long-term, though resale restrictions may limit future financial gains. Buyers with strong local connections may find additional advantages through priority access in certain areas.

Both schemes require careful financial planning, including consideration of mortgage affordability, future income prospects, and potential changes in personal circumstances. Consulting with independent financial advisors and mortgage brokers can provide tailored guidance based on individual situations. Understanding the full implications of each scheme ensures buyers make informed decisions aligned with their homeownership goals.