Affordable home ownership options first-time buyers need to know
For many people dreaming of owning their first home, the journey can begin with one daunting question: how can I afford to get on the property ladder? Rising household costs, mortgage rates and the required deposit size can make buying a home seem out of reach.
However, first-time buyers have a number of routes worth exploring. From government-backed initiatives to savings schemes and alternative ways of purchasing a property, understanding the options could help buyers identify a route that suits their circumstances.
Getting your deposit together
The Government has proposed replacing the Lifetime ISA (LISA) with a new First Time Buyer ISA (FTB ISA) to help people save for their first home. The consultation closed on 18 August 2026, but the proposed FTB ISA is not yet available, and no launch date has been confirmed.
For now, the LISA continues to operate under its existing rules. Existing LISA holders can keep their accounts and continue making contributions. Under the current proposals, the new FTB ISA would have no upper age limit and would not include a withdrawal charge. However, important details, including the annual contribution limit, Government bonus and maximum property price, have yet to be confirmed.
Useful boost towards buying a first home
For those still saving, a Lifetime ISA (LISA) can provide a useful boost towards buying a first home. Eligible savers can currently contribute up to £4,000 each tax year, with the government adding a 25% bonus, worth up to £1,000. You can continue paying into a LISA until you turn 50, provided you made your first payment before turning 40.
There are conditions attached, including rules on when money can be withdrawn without a charge. For a first home, the property must cost £450,000 or less, and the LISA must have been open for at least 12 months. Withdrawals for other purposes may incur a 25% charge, so it is important to understand the rules before relying on a LISA as part of your home-buying plans.
Sharing the cost of ownership
Shared Ownership offers another option for buyers who cannot afford to buy a property outright. Under the scheme, buyers purchase a share of a property, typically between 25% and 75%, and pay rent on the remaining share held by a housing provider.
A mortgage and deposit are generally required for the share being purchased, meaning the initial outlay can be lower than buying the entire property. Buyers may subsequently be able to purchase additional shares, known as ‘staircasing’, although costs and conditions can vary.
Looking at discounted homes
If you’re a first-time buyer, you may be able to buy a home for 30% to 50% less than its market value. The home must be your only or main residence. This offer is called the First Homes scheme. The home can be a new home built by a developer or a home you buy through an estate agent, which someone else previously bought through the scheme.
The First Homes scheme is available only in England. Eligibility requirements apply, and local authorities may have additional criteria, so buyers should check whether they qualify before making financial plans for a specific property.
Understanding mortgage support
The Mortgage Guarantee Scheme is designed to support the availability of mortgages for buyers with smaller deposits. Mortgages of up to 95% loan-to-value can mean a buyer may need a deposit of just 5%, subject to the lender’s affordability checks and criteria.
A smaller deposit can make buying sooner possible, but it also means borrowing a larger proportion of the property’s value. Buyers should consider the resulting monthly repayments, interest costs and the potential impact on their household finances.
Considering family assistance
Some first-time buyers may also receive financial help from family. A gifted deposit can provide valuable assistance, although lenders will normally require confirmation that the money does not need to be repaid.
Guarantor arrangements can offer another option, but anyone agreeing to act as a guarantor needs to understand the financial commitment involved. If the borrower cannot meet their mortgage payments, the guarantor may ultimately become responsible for the debt.
Planning beyond the purchase
The most appropriate way to enter a property is not necessarily the right option for every buyer. Consider the deposit available, expected mortgage payments, household budget, eligibility requirements and future plans before committing.
It is also worth budgeting for costs beyond the deposit, including legal fees, surveys, moving expenses, mortgage costs, insurance, and, depending on the property and circumstances, service charges or other ongoing costs.
THIS ARTICLE IS FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE PROPERTY, FINANCIAL, LEGAL, TAX, DESIGN OR PLANNING ADVICE. PROPERTY SUITABILITY, IMPROVEMENT COSTS, MAINTENANCE REQUIREMENTS, MORTGAGE AVAILABILITY AND FUTURE VALUE CAN VARY DEPENDING ON LOCATION, PROPERTY TYPE, MARKET CONDITIONS AND INDIVIDUAL CIRCUMSTANCES. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
THE INFORMATION CONTAINED WITHIN THIS ARTICLE WAS ACCURATE AT THE DATE OF PUBLICATION AND IS SUBJECT TO CHANGE. THERE CAN BE NO GUARANTEE THE INFORMATION WILL CONTINUE TO BE ACCURATE IN THE FUTURE.
