The First Homes scheme offers eligible first-time buyers in England a new-build home at a significant discount, making ownership more affordable. This guide explains the First Homes scheme: the discount, the price caps, who is eligible, how the discount is passed on, and the points to weigh before buying.

What First Homes is

First Homes is a government-backed scheme in England that lets eligible first-time buyers purchase a new-build home at a discount of at least 30%, and sometimes up to 50%, below its market value. Because the discount applies to the full price, it reduces both the deposit and the mortgage needed. The scheme aims to help local first-time buyers, particularly key workers and those with a local connection, onto the ladder.

The discount

The discount is typically 30% to 50% off the market value, set by the local council for each development. So a home worth £250,000 might be sold at £175,000 with a 30% discount. This lower price means a smaller deposit and mortgage, making the home more affordable, as our guide to your deposit explains. The size of the discount depends on the local scheme.

The discount is permanent

Crucially, the First Homes discount is permanent: when you sell, you must sell at the same percentage discount to the then-market value, passing the saving on to the next eligible buyer. So you cannot pocket the discount as profit; it stays with the home to keep it affordable for future first-time buyers. Understanding that you buy and sell at a discount is essential to how First Homes works.

The price caps

After the discount is applied, the home must cost no more than £250,000, or £420,000 in London. So the scheme is aimed at lower-priced homes, with the discount bringing them within these caps. Knowing the caps helps you understand which properties qualify. The price limits, along with the discount, are central to how First Homes targets affordability for local first-time buyers.

Who is eligible

Eligibility for First Homes typically requires you to be a first-time buyer, to meet an income cap, and sometimes to have a local connection or be a key worker, as set by the local council. There may be a maximum household income limit. Because criteria can vary locally, it is important to check the specific eligibility for the development you are interested in, as our guide to first-time buyer mortgages relates.

Availability is patchy

First Homes is only available where local councils have adopted the scheme and developers are providing First Homes properties, so availability is patchy and varies by area. Demand can be high where homes are offered. This means the scheme may not be an option everywhere, so it is worth checking whether First Homes properties are available in the area where you want to buy before counting on it.

The pros and cons

The main advantage of First Homes is buying at a substantial discount, reducing the deposit and mortgage needed. The drawbacks are the permanent discount (you sell at a discount too), limited availability, new-builds only, eligibility restrictions, and that you can usually combine it only with certain other support. Weighing the discount against these conditions, and against other schemes like Shared Ownership, helps you decide if it suits you.

An example of the discount

Suppose a new-build home has a market value of £250,000 and a First Homes discount of 30%. You would buy it for £175,000, needing a deposit and mortgage based on that lower price rather than the full value. A 10% deposit would be £17,500 instead of £25,000. The discount therefore reduces both the deposit and the mortgage, making the home considerably more affordable than buying at full price.

Mortgages for First Homes

You buy a First Home with a normal mortgage based on the discounted price, though not all lenders offer mortgages on First Homes, so the choice may be narrower. The lender assesses affordability as usual, as our guide to how much you can borrow explains. A broker familiar with the scheme can help find a suitable lender, since the discounted purchase has specific conditions lenders must accept.

Selling a First Home

Because the discount is permanent, when you sell you must sell at the same percentage discount to the then-market value, to an eligible buyer, preserving the affordability for the next first-time buyer. So you benefit from any rise in value on the discounted price, but you cannot sell at full market value and keep the difference. Understanding this resale rule is essential before buying through First Homes.

First Homes versus Shared Ownership

First Homes and Shared Ownership both lower the cost of buying, but differently: First Homes gives you full ownership at a discounted price, with no rent, while Shared Ownership means owning a share and paying rent on the rest. Which suits you depends on availability, the discount, and whether you prefer full ownership of a discounted home or a share of a full-priced one.

Checking local availability

Because First Homes depends on local councils adopting the scheme and developers providing properties, the first step is to check whether any First Homes are available where you want to buy. Local councils and developers can tell you. Since availability is patchy and demand can be high, confirming there are eligible properties in your area, and that you meet the local criteria, is important before counting on the scheme.

Is First Homes right for you?

First Homes can suit eligible first-time buyers in an area where it is offered, who want full ownership of a new-build at a meaningful discount and accept selling at the same discount later. It suits less well those who want to buy outside the scheme's areas or price caps, or who prefer an older home. Weighing the discount against the resale rule, availability and eligibility helps you decide whether First Homes fits your plans.

Always check current rules

Because First Homes depends on local councils and developers, and its rules and price caps can change, it is essential to check the current details and local availability before relying on it, as our guide to government schemes notes. Confirming what is offered in your area, the discount available, and the eligibility criteria through the council or developer ensures your plans are based on the current position.

Where it is available and you qualify, the substantial discount can make a real difference to affordability, turning an out-of-reach new-build into a realistic first home, provided you are comfortable with buying and later selling at the same percentage below market value.

In short

The First Homes scheme in England offers eligible first-time buyers a new-build home at 30% to 50% below market value, reducing the deposit and mortgage needed. The discount is permanent and passed to future buyers on resale. The home must cost up to £250,000 after the discount (£420,000 in London), there are eligibility rules, and availability depends on local councils, so it is patchy. Check what is offered locally.

Where to get help and next steps

Read our guides to government schemes overview, shared ownership, the Lifetime ISA, and first-time buyer stamp duty. This is general information, not mortgage or financial advice; scheme rules change, so check current details.