Your First Home vs Keyzy: What the New Scheme Means for London

The government's new Your First Home scheme halves the deposit and cuts the mortgage for first-time buyers of new-build homes, but it still asks buyers to pass a mortgage test on day one. Here is how it works, who it helps, and how it sits alongside Keyzy in London.

What is Your First Home?

On 28 October 2026 the government published guidance for Your First Home, a new scheme that lets first-time buyers in England buy a new-build home with a 2.5% deposit, a repayment mortgage and a government equity loan worth 20% of the purchase price. The loan is interest free for five years, and applications are expected to open in February 2027.

In practice the buyer puts down 2.5%, the government lends 20%, and a participating lender provides the remaining 77.5% as an ordinary repayment mortgage. The buyer owns the home outright from completion day: the government is neither a joint owner nor a landlord. Here is the government's own example for a £300,000 home:

The loan behaves like a stake in the home rather than a fixed debt. It is repaid, normally when the home is sold, as 20% of the property's value at that point, based on an independent valuation. If the £300,000 home is later worth £320,000, the buyer repays £64,000; if it falls to £280,000, they repay £56,000. The government shares the upside and the downside.

The interest-free period does not last forever. After year five the equity loan starts to cost money: 1.5% a year in year six and 3% a year from year seven, paid separately from the mortgage and without reducing what is owed. The scheme is backed by £4.7 billion over five years, with £700 million in 2027 to 2028 and £1 billion in each year after that. Developers pay a participation fee on each home sold through it, rising from 1% on their first 100 homes a year to 4% above 250.

How it helps first-time buyers

The scheme attacks the two things that stop people buying: the deposit and the size of the mortgage. On the government's £300,000 example the deposit halves from £15,000 to £7,500, and the mortgage falls by £52,500, from £285,000 to £232,500.

The monthly numbers matter more than the headline. Assuming a 30-year repayment mortgage at 5%, the government's illustration puts monthly cost at £1,248 in years one to five, against £1,530 for a standard 95% mortgage. That is £282 a month less. Even once equity loan interest starts, the total is £1,323 in year six and £1,398 from year seven, still below the standard mortgage on these assumptions.

There is a second benefit that is easy to miss: affordability checks. Lenders size a mortgage against income, so a smaller mortgage can be the difference between being approved or not. Because the equity loan sits outside the mortgage, a household that would have been declined for £285,000 may be approved for £232,500.

There are real trade-offs, and the government is clear about them. The saving shrinks as the interest steps up, and the equity loan is still owed when the buyer sells or repays it, so it does not disappear. It also moves with the market: a buyer who sees prices rise repays more, in cash terms, than they borrowed. Costs such as service charges, insurance and maintenance are not included in the example. And the scheme only covers new-build homes from participating developers, which narrows choice.

Who is it for?

The scheme is aimed at first-time buyers who would struggle to buy without help. To qualify, a buyer will normally need to be a first-time buyer, buy a new-build home in England within the local price cap, use it as their main home, get a mortgage from a participating lender, and have a total household income of no more than:

Note that the cap is on household income, not individual income, so a couple each earning £70,000 sits exactly at the London limit. Full eligibility rules and a complete list of local price caps will be published before applications open.

The caps shape who benefits most. As a rough illustration, using our own assumption of a mortgage at 4.5 times household income (lenders vary), a £500,000 outer London home bought through the scheme needs a mortgage of £387,500, which is about £86,000 of income. A standard 95% mortgage on the same home is £475,000, which needs about £106,000. At the inner London cap of £650,000 the equivalent figures are roughly £112,000 and £137,000. In other words, the scheme meaningfully lowers the income needed to buy at the top of the price caps.

Who does it leave out? First, anyone who cannot save the deposit: 2.5% is small, but it is still £12,500 on a £500,000 home and £16,250 at the inner London cap. Second, buyers who want an existing home, since only new builds qualify. Third, households above the income caps, and buyers in expensive pockets of London where new-build prices exceed the cap. And finally, households that cannot take on a mortgage at all, whose income, credit history or job security fails a lender's checks even with a smaller loan.

Your First Home and Keyzy: two routes up the same ladder

At Keyzy we exist because the traditional route onto the housing ladder, save a deposit while paying London rent and then qualify for a large mortgage, is closed to far too many households. Your First Home is the government's answer to the same problem, and it is a welcome one. But the two work in different ways, and the differences are most visible in London.

London affordability under the scheme

London is where the scheme's income and price caps are set highest, and where it has to work hardest. Using the government's own assumptions (a 30-year repayment mortgage at 5%), a £500,000 outer London home would cost roughly £2,080 a month on the scheme's mortgage in years one to five, against roughly £2,550 on a standard 95% mortgage. Those are our own calculations, not government figures. Equity loan interest adds around £125 a month in year six and £250 from year seven, before service charges, insurance and maintenance.

That is a real improvement, and the deposit falls from £25,000 to £12,500. But a mortgage of £387,500 still needs a household income in the region of £86,000 at typical lending multiples, which is well above what most London households earn. The scheme brings ownership within reach of households on good incomes who have been held back by the deposit; it does not, on its own, solve affordability for the many on middle incomes.

How Keyzy differs

Keyzy starts from a different place. Rather than helping someone to buy on day one, our model lets residents move into a new home on an assured shorthold tenancy, alongside a Future Buyback Agreement that is designed to give them a route to ownership over time. The two differ in four ways.

The first row is the real trade-off. Your First Home gives a buyer a home they own from the first day, with the upside and downside of the property market shared with the government. Keyzy gives a household time. For someone who earns well but has no deposit, the scheme is probably the better route. For someone whose income, savings or credit record will take a few years to mature, a mortgage application in February 2027 may simply fail, however small the deposit. For that household, the thing that matters is a stable home now and a plan for ownership later.

Complementary, not competing

We do not see the scheme as a threat. It widens the group who can buy, and it should put more new homes on the market, because it is designed to support developers as well as buyers. The more interesting question is how the two might fit together. A Keyzy resident who is ready to buy would, in principle, be a first-time buyer, so it is worth finding out whether they could use Your First Home on a qualifying new build once the full rules are published. We will be following that detail closely.

What to watch before February

Much is still to be published: the full list of local price caps, the participating lenders and developers, how equity loan interest will be collected, and the rules on repaying early, including any fees. Customer pre-registration is due before the end of 2026, which will not commit anyone to buy but will show buyers their eligibility and local price cap. Anyone considering the scheme should also weigh the costs the guidance flags, from higher future mortgage rates to service charges and the cost of selling, and take independent advice.

Your First Home is a meaningful step, and the biggest gains go to London households with decent incomes and a small deposit. For everyone who needs more time to get there, new routes are still needed. That is the problem Keyzy is built to solve.

Homes available now in London

Your First Home will not open for applications until February 2027, and even then buyers will need a deposit, a mortgage offer and a household income under the cap. If you do not want to wait, or you do not fit those rules, Keyzy has new homes in London available now with no deposit required and no income caps.

To see what is available and find out whether Keyzy is right for you, visit keyzy.com or get in touch with our team.