First Homes Scheme: 30-50% Discounts for First-Time Buyers Explained
The First Homes scheme is one of the more significant government-backed routes for first-time buyers in England, offering new build properties at a minimum 30% discount off open market value, and up to 50% in some council areas. Unlike shared ownership, you own 100% of the property from day one and pay no rent.
The catch is that the discount stays with the property forever, meaning your resale pool is narrower and your equity growth is capped compared to buying on the open market. This guide covers how the scheme actually works, who qualifies, how the mortgage side stacks up, and the trade-offs to weigh before applying.
What is the First Homes scheme and how does it work?
The First Homes scheme is a government-backed initiative in England designed to help first-time buyers purchase a new build home at a discount of 30% to 50% off its open market value.
The key features:
- The discount. Properties are sold at a minimum of 30% below market value. Local councils can increase this up to 50%. The discount is permanent and stays with the property for all future sales.
- Selling on. When you sell the home, the same percentage discount must be passed on to the next eligible first-time buyer, based on an independent valuation at the time.
- Ownership. Unlike shared ownership, you own 100% of the property from day one.
- Price caps. After the discount is applied, the maximum price is £250,000 outside London (£420,000 in London). Local authorities can set lower caps.
First Homes scheme: at a glance
| Discount off market value | Minimum 30%, up to 50% in some council areas |
| Ownership | 100% ownership from day one, with no rent to pay |
| Maximum price (after discount) | £250,000 outside London, £420,000 in London |
| Maximum household income | £80,000 outside London, £90,000 in London |
| Minimum mortgage required | At least 50% of the discounted purchase price |
| Minimum deposit | Usually 5% of the discounted purchase price |
| On resale | The same percentage discount must be passed to the next eligible first-time buyer, permanently |
Who is eligible for the First Homes scheme?
To qualify for the First Homes scheme in England, you need to meet several criteria:
- Age. You must be 18 or older.
- First-time buyer. You must never have owned a home, in the UK or abroad.
- Income limit. Your total household annual income must not exceed £80,000, or £90,000 if you’re buying in London.
- Mortgage requirement. You must secure a mortgage or home purchase plan for at least 50% of the discounted purchase price.
- Main residence. The property must be your sole or main residence.
Local councils may apply additional rules, such as lower household income caps, a local connection requirement, or priority for key workers like NHS staff, police officers or members of the armed forces.
What are the income and property price limits?
Income and price limits by location
Local authorities can enforce lower caps in their area, so it’s worth checking with the council covering the development you’re interested in.
Do you have to be a first-time buyer to qualify?
Yes. The First Homes scheme is specifically for first-time buyers. You must never have owned a residential property, whether in the UK or overseas. This mirrors the standard first-time buyer definition used for stamp duty relief and other government schemes.
Can key workers get priority?
Yes. Key workers can receive priority and, in some cases, larger discounts through the First Homes scheme and other government-backed initiatives.
Local authorities have the power to prioritise applications from specific professionals during initial marketing periods, typically NHS staff, teachers, emergency services personnel, and members of the armed forces. The exact criteria and priority window vary by council, so check with the local authority covering the development.
How do eligibility rules vary between local authorities?
- Income caps. Councils can set lower maximum household income thresholds than the £80,000 national limit during the initial marketing period.
- Local connection tests. Authorities can require buyers to prove existing residency, family ties or permanent employment in the local district.
- Key worker priorities. Councils can give preference to specific professionals vital to the area.
- Price caps. While national maximum prices apply after the discount, local authorities can enforce lower caps for their area.
How do you find First Homes properties in your area?
- Major property portals. Sites like Zoopla and Share to Buy have dedicated sections and filters for First Homes.
- Developer websites. Major housebuilders like Bellway Homes, Barratt Homes and David Wilson Homes list new build developments offering the scheme.
- Your local authority. Contact your council’s housing or low-cost home ownership team to ask about approved local developments.
When you find a property:
- Check listings carefully. Availability varies by specific plot, so read descriptions closely.
- Confirm eligibility. Make sure your household income is under £80,000 (£90,000 in London) and check for any local connection or key worker requirements.
- Speak to the sales team. Contact the development’s sales office to verify active First Homes plots and start the council application process.
Can you get a mortgage on a First Homes property?
Yes, and you have to. To buy through the First Homes scheme, you must have a mortgage that covers at least 50% of the discounted purchase price.
- Minimum borrowing. Your mortgage must equal or exceed half of the discounted home price. You can’t buy a First Homes property outright in cash, and you can’t take a very small mortgage.
- Deposit. You’ll still need a standard deposit, usually at least 5% of the discounted price.
- Specialist criteria. Some major banks and building societies offer mortgages specifically tailored to the First Homes scheme, though availability varies.
Which lenders support the First Homes scheme?
Several major high street banks and building societies support the First Homes scheme, offering mortgages up to 95% loan-to-value (LTV). The specifics:
- A minimum deposit of usually 5% of the discounted purchase price
- The mortgage must cover at least 50% of the discounted home value
- Lender participation is selective and offerings can change
Because the Section 106 restriction on First Homes properties limits which lenders will engage, it’s worth checking with a broker or the lender’s intermediary channel to confirm current availability. Halifax has historically been active in this market, along with other high street names, but the picture shifts, so it’s worth having the specific case checked.
How much deposit do you need?
You usually need a minimum deposit of 5% of the discounted purchase price for a First Homes mortgage.
Worked example: deposit on a First Homes property
- 1 Start with the open market value £200,000
- 2 Apply a 30% First Homes discount £140,000
- 3 Calculate a 5% deposit on the discounted price £7,000
- 4 The mortgage covers the rest, and must be at least 50% of the discounted purchase price, so you'll need a participating lender offering a 95% LTV First Homes mortgage
You’ll need to use a participating lender that offers a 95% LTV First Homes mortgage. Your deposit is paid when you exchange contracts with the seller or developer.
Can you combine First Homes with other first-time buyer support?
You can combine the First Homes scheme with certain savings and deposit supports, but not with other government equity loans or shared ownership.
Allowed combinations:
- Lifetime ISA (LISA). You can use your LISA savings and the government bonus towards your deposit, provided the home’s price stays within LISA rules (usually £450,000 or under).
- Family gifts. You can use gifted money from family towards your deposit, subject to your lender approving the source.
- The Mortgage Guarantee Scheme. Some lenders may allow you to combine a 95% LTV mortgage backed by the Mortgage Guarantee Scheme with a First Homes purchase, depending on the specific product.
Not compatible:
- Shared ownership. You can’t use shared ownership and First Homes on the same property, the two operate under different structures.
- Other equity loan schemes. You can’t stack First Homes with other government-backed equity loans.
What is the First Homes resale covenant?
The First Homes resale covenant is a permanent legal restriction registered against the property’s title deeds at HM Land Registry. It requires that the property must always be resold at the same percentage discount (30% to 50%) off its current open market value, and only to another qualifying first-time buyer.
The covenant is secured through a Section 106 planning agreement between the developer and the local authority. The purpose is to lock in the affordability of the property permanently, so successive generations of local first-time buyers benefit from the same level of assistance.
This is a legal restriction that stays with the property, not a personal restriction on you as the buyer. It’s one of the most important trade-offs to understand before buying, and one of the reasons some lenders won’t lend on First Homes properties.
What happens to the discount when you sell?
When you sell a First Homes property, the exact same percentage discount you originally received must be passed on to the next buyer.
If you bought with a 30% discount, you must sell at 30% below the property’s current market value. The discount stays with the property and applies to every future sale.
The process:
- Get the home valued by a surveyor registered with the Royal Institution of Chartered Surveyors (RICS) to determine the current open market value
- The maximum sale price is the new market value minus your original percentage discount
- You can choose to sell for less if you want, but not for more
- The buyer must also meet the First Homes eligibility criteria
This is where the “capped equity growth” issue comes in, because your resale price is always tied to a discounted base, any capital appreciation is proportionally smaller than if you’d bought on the open market.
Can you rent out a First Homes property?
Not generally, no. A First Homes property must remain your sole or main residence, so you can’t buy it as an investment and let it out.
There are limited exceptions in specific circumstances (for example, some Ministry of Defence-related situations), but these are narrow. If you’re considering a First Homes purchase but may want the flexibility to let the property out in future, it’s worth being aware that this isn’t allowed under the standard scheme rules.
Advantages and drawbacks of First Homes
Talk to Heron Financial
First Homes can be a genuinely useful route onto the ladder, especially if you’re a key worker, buying in an area with active developments, or would otherwise struggle to save a deposit on full market value. But the resale covenant and restricted lender pool mean it’s worth running the numbers properly against the alternatives (shared ownership, standard 95% LTV mortgages, and the mortgage guarantee scheme) before committing. If you’re weighing it up, we can talk through your specific position and help you decide whether First Homes is the strongest route for you.
FAQs
Is the First Homes scheme available in Scotland, Wales or Northern Ireland?
No. First Homes is an England-only scheme. Scotland, Wales and Northern Ireland have their own separate first-time buyer support routes.
How much can I save with the First Homes scheme?
The minimum discount is 30% off market value, with some councils allowing up to 50%. On a £250,000 property, that’s a saving of £75,000 to £125,000 off the market price.
Do I pay stamp duty on the discounted price or the market price?
You pay stamp duty on the discounted purchase price, not the full market value. Standard first-time buyer stamp duty relief also applies where the price falls within the relief threshold.
Can I use the First Homes scheme with a self-employed income?
Yes. First Homes eligibility is based on total household income and first-time buyer status, not employment type. Self-employed applicants can qualify provided their income meets the cap and they can evidence it in the standard way (typically two years of accounts or tax returns).
Is First Homes better than Shared Ownership?
It depends on your situation. First Homes gives you 100% ownership from day one with no rent, but the discount is locked in permanently. Shared Ownership lets you start smaller and buy more of the property over time (staircasing), but you pay rent on the unowned share. There’s no universally better option, it comes down to your finances, plans and the properties actually available in your area.
Can I overpay my First Homes mortgage?
Yes. Standard overpayment allowances apply on your mortgage (usually 10% of the outstanding balance per year without penalty). Overpaying reduces your mortgage balance in the normal way, it doesn’t change the resale covenant or the discount on the property.
How long does the First Homes application process take?
It depends on the local authority’s processing time and the development’s timeline. Council eligibility checks usually take a few weeks, alongside the standard mortgage application and conveyancing process which typically means 8-12 weeks from offer to completion, though it can vary.