The First Homes Scheme: A 2026 Guide for First-Time Buyers

The First Homes scheme lets eligible first-time buyers in England buy a designated new-build home at a discount of 30% to 50% off its open-market value. The discount is not a one-off gift: it is locked into the property and passed on to the next eligible buyer when you sell, keeping the home affordable for local first-time buyers in the long term. To qualify you must be a first-time buyer, meet an income cap, and buy a home priced within a set limit after the discount is applied. This guide explains exactly how it works, who is eligible, and how it differs from Shared Ownership.

In short: First Homes cuts the purchase price of a new-build by at least 30% for local first-time buyers on modest incomes — but that same discount stays attached to the home forever, so you sell it on at a discount too.

How does the First Homes scheme work?

Under First Homes, a housebuilder sells certain new-build homes at a discount of at least 30% — and in some areas up to 50% — off the price they would otherwise fetch on the open market. You buy the whole home outright with a normal mortgage and deposit, just at the reduced price, so unlike Shared Ownership you own 100% of it from day one and pay no rent to anyone. The discount is written into a legal restriction on the property. When you eventually sell, you must sell at the same percentage discount off the market value at that time, to another buyer who also qualifies for the scheme. That is how the affordability is preserved for the next generation of first-time buyers.

First Homes scheme eligibility

The scheme is deliberately targeted, so eligibility is tighter than a standard purchase. You must meet all the core conditions, and local councils can add further priority rules — for example favouring key workers or people with an existing connection to the area.

• You must be a first-time buyer, aged 18 or over
• Household income must not exceed £80,000 (or £90,000 in London)
• You must use a mortgage or home-purchase plan for at least half the discounted price
• The home's price after discount must not exceed £250,000 (or £420,000 in London)
• Local councils may prioritise local residents, key workers or others for specific developments

The price caps and income limits explained

Two caps keep First Homes focused on those who need it. The income cap means a household earning more than £80,000 a year — or £90,000 within Greater London — cannot use the scheme. The price cap applies after the discount has been taken off: the home you actually buy must cost no more than £250,000, or £420,000 in London. Because the discount is at least 30%, that £250,000 cap corresponds to a home worth up to roughly £357,000 at full market value outside London. Local authorities can set a larger discount, up to 50%, where their housing market needs it, which brings even higher-value homes within reach.

How the discount passes on when you sell

This is the defining feature of First Homes and the point buyers most often misunderstand. The discount does not belong to you — it belongs to the home. If you buy at a 30% discount, you must later sell at a 30% discount off whatever the property is worth at that future date, to another eligible first-time buyer. So you still benefit from any rise in the market on the value of your equity, but you never sell at the full open-market figure. A legal restriction registered against the title enforces this, and your conveyancer will explain it during the purchase. It keeps the home permanently affordable, which is the scheme's whole purpose.

“Think of the First Homes discount as a permanent feature of the property, not a personal windfall. You buy cheaper and you sell cheaper — the saving is handed on to the next first-time buyer in the chain.”

The local connection rule

One feature that surprises buyers is that First Homes are not simply sold to whoever applies first nationally. Local councils are allowed to attach a local-connection requirement to the scheme homes in their area, prioritising people who already live or work there, or who have a strong link such as family nearby. Some councils also give priority to key workers — for example NHS staff, teachers or emergency-service personnel. These local rules vary from one authority to the next, so a development in a neighbouring borough may apply completely different priority criteria. It is worth checking the specific eligibility conditions for the exact development you are interested in, rather than assuming the national rules are the whole picture, because the local overlay can decide whether you qualify at all.

How to apply for a First Homes property

First Homes are sold by the developers building them, so the starting point is finding a development in your area that offers scheme homes — local council planning pages and housebuilders' new-build listings are the places to look. When you find one, you apply through the developer or their sales agent, who will check your eligibility against the income, first-time-buyer and local-connection criteria before reserving the home. You will need a mortgage agreement in principle and a conveyancer familiar with the First Homes restriction. Because eligible homes are limited and popular, it pays to have your finances and paperwork ready before you enquire. A broker who has handled First Homes purchases before can also help, as not every lender offers mortgages on discounted scheme properties and the legal restriction on the title needs a lender comfortable with it.

First Homes vs Shared Ownership

Both schemes help first-time buyers, but they work in fundamentally different ways. With First Homes you own 100% of the property from the outset at a discounted price and pay no rent, but you are bound to resell at that same discount. With Shared Ownership you buy only a share — typically 25% to 75% — and pay rent to a housing association on the rest, with the option to staircase up to full ownership later. First Homes tends to suit buyers who can fund a full mortgage on a discounted price and want outright ownership; Shared Ownership suits those who need to keep the initial mortgage and deposit as small as possible. Note that Help to Buy equity loans are no longer an option — that scheme closed to new applicants in 2023 — so First Homes and Shared Ownership are the main government routes today.

A useful way to decide between them is to look at your deposit and your monthly budget together. If you have enough saved for a deposit on a discounted-price home and your income comfortably covers a full mortgage on that figure, First Homes gives you the simplicity of complete ownership and no landlord. If your deposit is small and a full mortgage — even on a discounted home — would stretch you, Shared Ownership lets you start with a smaller share and grow into it. Neither locks you out of the market permanently: many buyers use one scheme as a stepping stone, then move to an open-market home later once they have built up equity and a stronger financial position.

This guide is for informational purposes only and does not constitute financial advice. First Homes eligibility, discounts, price caps and local rules vary and can change — always check the current criteria and speak to a qualified mortgage adviser or financial adviser before making decisions.