Nearly four out of five UK adults say saving a deposit is one of the biggest barriers to buying a home, according to recent research. That figure — 79% of people struggling to save — tells you everything about how tough the market feels right now. I’ve been writing about property for long enough to see the same pattern repeat: buyers know schemes exist, but they don’t know which one actually fits their situation, or they assume they won’t qualify. The result is that thousands of people every year miss out on help that could cut their deposit by thousands of pounds.
The good news is that the government runs several schemes designed specifically to help first-time buyers. Some let you buy with a 5% deposit. Others give you a discount on the purchase price or add a bonus to your savings. The trick is knowing which one works for your income, your location, and the type of property you want. Here’s what you actually need to know.
How Shared Ownership and First Homes Actually Work
Let’s start with the two schemes that cause the most confusion. Shared Ownership and First Homes both help you buy with less money upfront, but they work in completely different ways. The key difference is ownership. With Shared Ownership, you buy a share and pay rent on the rest. With First Homes, you own the whole property from day one at a discounted price.
Shared Ownership is the most widely used government scheme for first-time buyers who cannot afford to buy outright. You purchase a share of a property — typically between 25% and 75%, though some providers now offer shares as low as 10% — and pay subsidised rent on the remaining portion to a housing association. Your mortgage and deposit are calculated on your share only. If you buy a 30% share of a £250,000 home, your mortgage covers £75,000 and your deposit could be as low as £3,750 (5% of the share). Over time, you can buy additional shares through staircasing until you own the home outright. Household income must not exceed £80,000 per year (£90,000 in London), and you must be a first-time buyer or someone who cannot afford a suitable home on the open market. Properties are usually leasehold, so expect a monthly service charge and potential maintenance fees for major works.
First Homes gives first-time buyers and key workers a minimum 30% discount on new-build homes in England. Unlike Shared Ownership, you own 100% of the property and pay no rent on any portion. The discount stays with the property permanently and must be passed on to the next eligible buyer when you sell. You must be a first-time buyer, have a household income under £80,000 (£90,000 in London), and get a mortgage for at least 50% of the discounted price. The discounted price must not exceed £250,000 (£420,000 in London). Local authorities can increase the minimum 30% discount to 40% or even 50% in their area. Key workers — NHS staff, teachers, police, and emergency services — often get priority access. Availability is limited and varies by area, so it pays to check with local councils early.
What I’d do if I were starting out today: I’d look at Shared Ownership first if I wanted a lower monthly commitment and didn’t mind renting a portion. I’d go for First Homes if I could stretch to a slightly higher mortgage but wanted full ownership and no rent. The choice really comes down to what you can afford month to month, not just the deposit.
Why the Lifetime ISA and Mortgage Guarantee Scheme Matter Right Now
The Lifetime ISA remains one of the most generous savings tools for first-time buyers. For every £4 you save, the government adds £1 on top, up to a maximum bonus of £1,000 per year. If you save the maximum £4,000 each year from age 18 to 50, you could accumulate £32,000 in government bonuses alone. You can open a LISA between ages 18 and 39, and you can keep contributing until you turn 50. The property must cost £450,000 or less, and the account must be open for at least 12 months before you use it to buy. You can choose a cash LISA or a stocks and shares LISA — cash is safer if you plan to buy within a few years. Withdrawing funds for anything other than your first home or retirement incurs a 25% penalty, which means you lose your government bonus plus some of your own money.
The Mortgage Guarantee Scheme is different — it doesn’t give you cash, but it makes buying possible. A new permanent version launched in July 2025, replacing the temporary scheme that closed in June 2025. It works behind the scenes: the government guarantees part of the mortgage, which encourages lenders to offer 95% mortgages. More than 53,000 mortgages have been completed with help from the original scheme. There’s no income cap, and you can use it on any property up to £600,000. You apply for a normal mortgage — your lender handles the guarantee. The scheme was announced in Labour’s 2024 election manifesto and was referred to as the Freedom to Buy scheme.
What I notice is that many buyers overlook the LISA because they think they won’t save enough to make it worthwhile. But even saving £100 a month adds up to £1,200 a year, and the government tops that up to £1,500. Over five years, that’s an extra £1,500 you wouldn’t have otherwise. The Mortgage Guarantee Scheme, meanwhile, is often misunderstood as a loan — it’s not. It’s a guarantee that lets you borrow more with a smaller deposit.
Where People Go Wrong With Home Purchase Grants
The most common mistakes aren’t about picking the wrong scheme — they’re about not checking the details before committing. Here are the four errors I see most often.
Assuming You Don’t Qualify Based on Income
Many people assume they earn too much to qualify for any help. But the Lifetime ISA has no income cap at all, and the Mortgage Guarantee Scheme doesn’t either. Shared Ownership and First Homes cap household income at £80,000 (£90,000 in London), which covers a wide range of buyers. If you’re a dual-income couple both earning around £40,000, you’re still eligible for most schemes. The mistake is ruling yourself out before checking the actual thresholds.
Ignoring the 12-Month LISA Rule
The Lifetime ISA must be open for at least 12 months before you can use it to buy a home. I’ve seen people open a LISA, save diligently, and then find their dream property nine months later — only to discover they can’t use the money without paying a 25% penalty. If you’re planning to buy within the next year, a cash ISA or a Help to Buy ISA (if you still have one) might be a better short-term option. The LISA is brilliant, but only if you give it time to mature.
Overlooking Service Charges on Shared Ownership
Shared Ownership properties are almost always leasehold. That means you’ll pay a monthly service charge for building maintenance, grounds upkeep, and insurance. You may also be liable for major works — roof repairs, lift replacements, or structural issues — which can run into thousands of pounds. Buyers often focus on the low deposit and forget to budget for these ongoing costs. Before you commit, ask the housing association for a full breakdown of current and projected service charges.
Not Checking Local First Homes Availability
First Homes availability varies dramatically by area. Some local authorities have allocated all their First Homes properties within weeks of release. Others have increased the minimum discount to 40% or 50%, which changes the maths significantly. The mistake is assuming the scheme is available everywhere. You need to contact your local council, check their website, and register interest with developers building in your target area. If you wait until you’re ready to buy, the best properties may already be gone.
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| Scheme | How It Helps | Income Cap | Property Types |
|---|---|---|---|
| Shared Ownership | Buy 10–75% share, rent the rest | £80,000 (£90,000 London) | New builds and resales |
| First Homes | 30–50% discount on market value | £80,000 (£90,000 London) | New builds (England only) |
| Lifetime ISA | 25% bonus on savings (up to £1,000/year) | None (age 18–39 to open) | Any property up to £450,000 |
| Mortgage Guarantee | Buy with 5% deposit | None | Any property up to £600,000 |
| Stamp Duty Relief | 0% on first £300,000 | None | Any property up to £500,000 |
What I’d say about the service charge issue specifically: it’s not a dealbreaker, but it’s a dealmaker if you ignore it. I’ve spoken to buyers who budgeted for their mortgage and rent but forgot the £150 monthly service charge. That’s £1,800 a year you need to account for. Factor it in from day one, and Shared Ownership remains a solid option.
How to Choose and Apply for the Right Scheme
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The right scheme depends on three things: your income, your savings, and the type of property you want. Here’s how to work through each option step by step.
Check Your Eligibility First
Start with the Lifetime ISA if you’re under 40 and have at least 12 months before you plan to buy. Open one with a cash provider like Moneybox or Nutmeg, and set up a monthly direct debit. The 25% bonus is paid monthly, so you see the benefit quickly. If you’re buying within 12 months, skip the LISA and focus on the Mortgage Guarantee Scheme instead — you can still get a 95% mortgage without waiting. For Shared Ownership and First Homes, check your household income against the £80,000 (£90,000 in London) cap. If you’re over that, the Mortgage Guarantee Scheme or a standard mortgage with a larger deposit may be your best bet.
Compare Shared Ownership and First Homes Side by Side
If you qualify for both, the decision comes down to monthly affordability. Shared Ownership gives you a lower deposit and lower mortgage, but you pay rent and service charges. First Homes gives you full ownership and no rent, but your mortgage is higher because you’re borrowing on the full discounted price. Run the numbers for a £250,000 property. With a 30% First Homes discount, you’d pay £175,000 and need a mortgage of at least £87,500 (50% of the discounted price). With Shared Ownership on a 25% share, you’d pay £62,500 for your share, need a deposit of £3,125 (5%), and pay rent of roughly £515 per month on the remaining 75%. The First Homes route costs more upfront but leaves you with no rent. Shared Ownership costs less upfront but has ongoing monthly costs.
Apply Through the Right Channels
For Shared Ownership, you apply through the housing association or developer that owns the property. Most have online portals where you register interest, submit proof of income, and get approved. Properties are allocated on a first-come, first-served basis in most areas since 2016. For First Homes, you register with the developer and your local council. Some councils maintain a priority list for key workers and local residents. For the Lifetime ISA, you open the account with a provider — no application to the government is needed. For the Mortgage Guarantee Scheme, you simply apply for a 95% mortgage with a participating lender. Your lender handles the guarantee behind the scenes.
What to Do If You’re a Key Worker
Key workers — NHS staff, teachers, police, and emergency services — often get priority access to First Homes properties. Some local authorities reserve a percentage of First Homes for key workers. If you qualify, contact your local council’s housing department and ask about their allocation policy. You may also qualify for additional discounts or priority on Shared Ownership properties. It’s worth registering with multiple housing associations in your area to increase your chances.
- 1Check your eligibilityReview income caps, property price limits, and your timeline. Use the table above to match your situation to the right scheme.
- 2Open a Lifetime ISA if you have 12+ monthsSet up a monthly direct debit. The 25% bonus is paid monthly. If you’re buying sooner, skip this step and focus on the Mortgage Guarantee Scheme.
- 3Register with housing associations and developersFor Shared Ownership and First Homes, register early. Properties go fast. Check local council websites for priority lists.
- 4Get a mortgage agreement in principleSpeak to a mortgage broker who knows these schemes. They’ll help you find a lender offering 95% mortgages under the Mortgage Guarantee Scheme.
What I’d do if I were a key worker: I’d register with my local council’s First Homes priority list immediately, even if I wasn’t ready to buy for another year. The waiting lists can be long, and getting on early gives you a better shot at the best properties. I’d also open a Lifetime ISA the same week — the bonus is too good to leave on the table.
Frequently Asked Questions
Can I use a Lifetime ISA and Shared Ownership together? ▾
What happens if I sell a First Homes property? ▾
Is the Mortgage Guarantee Scheme a loan I have to repay? ▾
Can I buy a Shared Ownership property if I already own a home? ▾
What’s the penalty for withdrawing from a Lifetime ISA early? ▾
Do I need a solicitor for Shared Ownership or First Homes? ▾
Your Next Step
The schemes are there, the money is available, and the process is clearer than most people think. Your job is to pick the one that fits your income, your timeline, and the type of home you want. Open a Lifetime ISA if you have a year or more. Register with housing associations and developers if Shared Ownership or First Homes appeals. And if you’re ready to buy now, the Mortgage Guarantee Scheme means a 5% deposit is still a realistic option. If this was useful, you might also want to read essential legal due diligence tips for buyers.
Sources and Further Reading
Understanding pre-selling risks when buying a house — A closer look at the risks of buying off-plan and how to protect yourself.
Government schemes to help you buy a home. HomeOwners Alliance, 2025.
Government schemes for first-time buyers UK 2026. We Move Together, 2025.
