Budget 2026 for First-Time Buyers: Your First Home, the LISA Change and the New ISA

By the Commercial & Property Finance Team at Acorn.finance | Published 29 October 2026

Key points

Your First Home offers a government equity loan of up to 20% on new-build homes in England, from a 2.5% deposit.
Household income caps are £110,000, or £140,000 in London. Local price caps apply.
Pre-registration opens by the end of December 2026, and the first loans come in April 2027.
From 29 October 2026, the Lifetime ISA charge for existing holders buying above £450,000 falls from 25% to 20%.
A First-Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029.

Your First Home: how it works

Feature	Detail
Where	England only, new-build homes from participating developers
Government equity loan	Up to 20% of the purchase price
Deposit	From 2.5%, subject to the lender's affordability and lending requirements
Household income cap	£110,000 outside London; £140,000 in London
Price caps	Based on local median prices. £650,000 in inner London and £500,000 in outer London. Examples: £375,000 in Reading, £320,000 in North Devon, £355,000 in Manchester. The full list is not yet published.
Interest on the equity loan	0% in years 1 to 5, 1.5% in year 6, 3% from year 7
Timetable	Pre-registration by the end of December 2026; applications from February 2027; first loans from April 2027
Funding	£4.7 billion, intended to help about 70,000 households and support about 20,000 new homes

Example (simplified): on a £300,000 new-build, the equity loan is £60,000, your deposit is £7,500 (2.5%) and your mortgage is £232,500 (77.5%). On a £60,000 equity loan, the government's example is £75 a month interest in year six and £150 a month from year seven.

The small print

You repay a share of the value, not a fixed sum. If you borrowed 20% of a £300,000 home and it is worth £320,000 when you repay, you repay £64,000. If it is worth £280,000, you repay £56,000.
Interest does not reduce the loan. The year-six and year-seven interest does not pay down the equity loan.
New-build only. RICS and GLPG's Matt Glazer both wanted the scheme to cover existing homes, which would help unlock housing chains.
Price caps bite in places. Ballymore says a couple earning £140,000 could afford about £750,000, yet face £650,000 and £500,000 caps in London.
It will not transform supply. The Office for Budget Responsibility expects only a marginal effect on housing supply, and Zoopla estimates about half the impact of the old Help to Buy scheme.
Developers pay to take part, with progressive fees of 1%, 3% and 4% on sales, which may affect how many take part.
You still need a mortgage on the rest. Talk to our residential mortgage advisers early, because lender criteria for equity loan borrowers are still emerging.

Lifetime ISA and the First-Time Buyer ISA

From 29 October 2026. The government is reducing the withdrawal charge for existing Lifetime ISA holders who use their savings to buy a first home above the £450,000 property price cap. The charge falls from 25% to 20%, which means you get back at least what you paid in. For example, £10,000 saved becomes £12,500 with the bonus, a 20% charge takes £2,500, and you keep £10,000. The £450,000 cap is unchanged.

From April 2029. A new First-Time Buyer ISA will replace the Lifetime ISA for new savers. It provides a 25% government bonus, paid on withdrawal, towards the purchase of a first home worth up to £450,000. The maximum bonus is capped at £20,000. Existing Lifetime ISA holders can continue to contribute to and use their accounts under the current rules. The annual savings limit of £4,000 continues, and the cash ISA allowance stays at £20,000.

Homeowners and movers

There was no stamp duty reform and nothing that changes your mortgage rate directly. The Office for Budget Responsibility expects inflation to reach 3.75% early next year before falling, so if your fixed rate is ending, speak to an adviser early.

What to do now

Check you meet the income cap and what the price cap is in your area once published.
Get a mortgage agreement in principle before the scheme opens.
If you hold a Lifetime ISA and are buying above £450,000, check your numbers again.
Remember that the scheme only applies to new-builds in England. Scotland, Wales and Northern Ireland have their own schemes.

FAQs

Is Your First Home available across the UK? No. It is for new-build homes in England only.

Can I use it on an existing home? No.

Do I pay interest on the equity loan? Not for five years. Then 1.5% in year six and 3% from year seven.

Does the Lifetime ISA change let me buy anything? No. The £450,000 limit remains. The charge on buying above it is lower.

Sources

Budget 2026: What It Means for Pubs, Business Owners, Landlords, Homebuyers and DevelopersA steady Budget, not a game-changer: real gains, real costs and a lot of small print.Budget 2026 for Pubs: Rates Relief Rises to 35%, but Is It Enough?Pub rates relief in England rises from 15% to 35% from 1 April 2027.Budget 2026 for Business Owners: Capital Allowances, BADR and Founders' ReliefThe Business Asset Disposal Relief lifetime limit halves from £1 million to £500,000 for disposals on or after 6 April 2027.Budget 2026 for Landlords: Property Income Tax Rises, and Why Incorporation Deserves a LookFrom 6 April 2027, individual landlords pay property income tax at 24%, 44% and 49%.Budget 2026 for Property Developers: Funding, Viability and Where the Opportunities AreAn extra £1.5 billion for social and affordable housing, reported as delivering about 10,000 homes.

Discuss your plans

Speak to an Acorn.finance broker about how the Budget affects your finance plans.

0207 959 3882

This article is general information based on the Budget document and published reporting as at 29 October 2026. Details may change as legislation is published. Acorn.finance does not provide tax or legal advice. Take advice from a qualified accountant or solicitor before acting. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured against it. Finance is subject to status and lender criteria.