Buying your first home in the UK can feel overwhelming, especially when you’re navigating rising prices, strict affordability checks, and multiple government schemes all claiming to help. From the Lifetime ISA and Shared Ownership to the First Homes scheme, each offers different ways to get on the property ladder.
But how do they actually work, who qualifies and which one (if any) makes the most sense for your situation? This guide breaks down the key first-time buyer mortgage schemes in the UK in plain English, covering what’s changed recently, what to watch out for, and what kind of buyer each scheme is best suited to.
What Is a First-Time Buyers Mortgage Scheme in the UK?
Government mortgage schemes are designed to reduce the financial hurdles first-time buyers face. These include support with deposit saving, part-ownership options and discounted purchase prices on new-build homes.
To be classed as a “first-time buyer,” you must never have owned a property anywhere in the world, including property inherited or received as a gift. Most schemes also have income, property value and age restrictions, so eligibility varies.
Since 1 April 2025, first-time buyer Stamp Duty relief thresholds have reverted to their previous levels, which means some buyers may pay more in upfront tax than last year.
The three most relevant schemes in 2025 are:
- Lifetime ISA (LISA)
- Shared Ownership
- First Homes
1. Lifetime ISA (LISA)
A Lifetime ISA is a government-backed savings account designed to help people save for their first home or retirement. You can open one between the ages of 18 and 39, contribute up to £4,000 per year, and receive a 25% bonus on those contributions, up to £1,000 annually.
Eligibility
- Age 18–39 to open; you can save until 50.
- Must be a UK resident.
- Property price must be £450,000 or less for the full purchase price, even if buying through Shared Ownership.
- Must purchase with a residential mortgage secured on the property (not buy-to-let). Many lenders require repayment.
- Property must be purchased at least 12 months from the date of your first payment into that LISA.
- Must purchase with a residential mortgage secured on the property (not buy-to-let). Many lenders require repayment.
- Property must be purchased at least 12 months from the date of your first payment into that LISA.
Example: If your new home costs £460,000 in total, you cannot use your LISA even if you’re only buying a 25% share.
Pros
- Free government bonus adds up quickly.
- Interest and bonus are tax-free.
- Can be used in combination with other schemes (like Shared Ownership).
Cons
- Strict property price cap, not ideal in areas with high property prices.
- Can’t use with an interest-only mortgage.
- 25% withdrawal charge on the whole pot if used for a non-qualifying reason, meaning you lose the bonus and around 6.25% of your own contributions.
- Example: Withdraw £4,000 plus a £1,000 bonus = £5,000 total; a 25% penalty = £1,250 loss, leaving you £3,750, a £250 loss of your own money
Recent Updates
As of 2025, the Lifetime ISA remains unchanged in terms of limits and rules, though there’s growing industry pressure to increase the £450,000 price cap, particularly in cities like London. No formal updates have been confirmed just yet.
2. Shared Ownership
Shared Ownership lets you buy a portion of a property (usually 10–75%) and pay rent on the remainder. You can increase your share over time through “staircasing,” eventually owning 100% if you choose.
Eligibility
- Must be a first-time buyer, or a previous homeowner who can’t afford a new home now.
- Household income under £80,000 (£90,000 in London).
- Must not own another property at purchase.
Pros
- Lower deposit required (based on share purchased).
- Smaller mortgage needed = easier affordability.
- Opportunity to staircase over time as your income grows.
Cons
- You pay rent + mortgage, can be more expensive monthly.
- You’ll likely pay service charges even if you own 100%.
- Selling can be more complex and slower than full ownership.
- You don’t benefit from full house price growth until you own 100%.
Recent Updates
- Minimum initial share reduced to 10%
- 1% staircasing increments allowed for greater flexibility
- A 10-year initial repairs period, meaning landlords cover certain maintenance costs during the first decade
3. First Homes Scheme
Launched in 2021, the First Homes scheme offers a discount of at least 30% (up to 50% in some areas) on new-build properties to local first-time buyers and key workers. The discount stays with the property for future buyers, helping keep it affordable.
Eligibility
- Must be a first-time buyer
- Local connection criteria apply (set by local authority)
- Household income below £80,000 (£90,000 in London)
- After-discount property price caps: £250,000 (£420,000 in London)
- Mortgage must cover at least 50% of the discounted price
Pros
- Significant price reduction.
- A discount is locked into the property for future sales, helps others too.
- Some councils prioritise key workers (teachers, NHS staff, etc.).
Cons
- Limited availability, only on selected new-build developments.
- Must meet local authority criteria.
- A discount may limit future resale options.
Recent Updates
Wider affordable-housing funding was announced in March 2025, but no specific expansion of the First Homes scheme has been confirmed. Local availability remains patchy and dependent on developer participation.
Which Scheme Is Right for You?
| Buyer Type | Best Fit |
| Saving for a deposit | Lifetime ISA: adds a 25% bonus and tax-free interest. |
| Lower income or limited deposit | Shared Ownership: buy a smaller share with less upfront cost. |
| Looking for a new-build & local to area | First Homes: get a deep discount on selected properties. |
You can often combine schemes, for example, using a Lifetime ISA mortgage to buy a Shared Ownership home. However, not all lenders support all combinations, so speaking to a mortgage adviser early is crucial.
Final Thoughts and Next Steps
Each government scheme for first-time buyers has pros, limits and fine print.
Understanding what fits your financial position and your long-term goals is the first step to making the most of what’s available.
If you’re unsure which scheme is best for you, or how lenders view each option, speak to a specialist mortgage adviser. The right guidance could mean securing your first home months sooner, and on better terms.
