Income Caps Announced for First-Time Buyer Loan Scheme
Andy Burnham has set out income caps for the government's new Your First Home scheme, with households expected to qualify if they earn up to £110,000 outside London and up to £140,000 in the capital. The details, including final salary limits, are due to be confirmed in next week's Budget, according to reports.
The scheme is designed to help first-time buyers in England purchase new-build homes with government-backed equity loans worth 20% of the purchase price from participating developers. Buyers would also be able to use deposits as low as 2.5%. Burnham announced the scheme at last month's Labour conference and said it would focus on people who "really need support."
How the Scheme Works
Under the proposal, the loan would be interest-free at first, and developers taking part would also be asked to contribute towards running costs. For buyers, the practical test is simple: if household income stays within the expected cap, the scheme could reduce the size of the deposit needed on a new-build home.
The income caps are meant to decide which households can get access, placing the policy between broad homeownership help and tighter targeting. The Times reported that ministers first considered limits of £90,000 outside London and £110,000 in the capital, before deciding those figures would exclude too many middle-earning couples such as teachers and nurses.
That adjustment matters because the scheme is meant to reach buyers who earn too much for the lowest-end help but still struggle to assemble a deposit. Next week's Budget is the point at which the final salary caps and the rest of the scheme's terms are due to be announced. For buyers watching whether they qualify, the answer now turns on the final income rule rather than the loan size alone.
Context: Learning from Help to Buy
The new plan follows the Help to Buy scheme, which ran from 2013 to 2021 and let all home purchasers put down a 5% deposit on a newly built home worth up to £600,000, with up to 20% of the cost covered by a shared equity loan. That loan was interest-free for the first five years. A second version of the Help to Buy scheme ran from 2021 to 2023 and restricted access to first-time buyers, with regional-level price caps on the homes that qualified.
The new income cap goes further by screening applicants by earnings as well as by property type. Previous initiatives designed to support first-time buyers did not impose income eligibility limits, but they faced backlash for inflating house prices by enabling relatively affluent households to borrow larger sums. The government has asserted that the initiative is aimed at stimulating the construction sector, particularly in light of the acknowledgment that they are unlikely to meet the ambitious target of building 1.5 million homes in England before the next election.
Pressure on First-Time Buyers
The scheme arrives amid sustained affordability challenges. According to NeighborWorks America, first-timers made up 21% of buyers in 2025, based on National Association of Realtors data. Over the past five fiscal years, the median purchase price for program participants grew by 26%, to $260,500 from $206,000, while annual median household income rose 24% to $66,000 from $53,000. Median down payment assistance rose by 67% to $16,700.
"Our organizations sit down with people who have been told the math does not work for them, and then they help make it work," said Marietta Rodriguez, president and CEO of NeighborWorks America. The scheme's income caps aim to address similar concerns in England, though critics may question whether the caps are set at the right level to help those most in need without inflating prices further.
Perspective: A Targeted Approach to Homeownership Support
The income caps represent a shift toward means-tested support for first-time buyers. By screening applicants by earnings, the government aims to avoid the pitfalls of broad-based schemes that critics say inflated demand without addressing supply. The decision to raise the initial proposed caps from £90,000 to £110,000 outside London reflects a recognition that middle-income professionals such as teachers and nurses often struggle to save for a deposit, particularly in high-cost areas.
However, the scheme's success will depend on developer participation and the final terms set in the Budget. If the caps are too high, the scheme could face the same criticism as Help to Buy; if too low, it may fail to help those it targets. The interest-free period and developer contributions towards running costs could make the scheme attractive, but the long-term impact on house prices and construction volumes remains uncertain.
For now, first-time buyers awaiting the Budget will be watching closely to see if they fall within the income limits and whether the scheme delivers on its promise to make homeownership more accessible. The broader trend is clear: governments are increasingly looking for targeted ways to support first-time buyers without stimulating overall demand, and the Your First Home scheme will be a test case for that approach.
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