First Homes Scheme in 2026: Eligibility, Discounts, and How to Apply (Step-by-Step)

The First Homes scheme is designed to help local first-time buyers and key workers purchase a new-build home in England at a minimum 30% discount to the market value. In 2026, with affordability still stretched in many areas and lenders continuing to scrutinise incomes and outgoings carefully, understanding how the scheme works—and how it interacts with mortgages—is essential before you reserve a property.

What is the First Homes scheme?

First Homes is a government-backed initiative delivered through the planning system in England. Homes sold under the scheme must be sold at a discount of at least 30% compared to the open market price (some areas set higher discounts, such as 40% or 50%). The key feature is that the discount is passed on to future eligible buyers when the property is resold.

Unlike shared ownership, you typically buy 100% of the property (but at a discounted price). Unlike Help to Buy (now closed), there is no government equity loan—you’ll fund the purchase with a deposit and a mortgage as normal.

First Homes eligibility in 2026

Eligibility rules can include both national criteria and local authority-specific criteria (for example, local connection tests). The headline national rules are broadly:

• You must be a first-time buyer (generally, you must not have owned a home before in the UK or abroad).
• Your household income must typically be £80,000 or less (or £90,000 or less in London).
• You must be able to obtain a mortgage (or use savings) for at least 50% of the discounted purchase price—most buyers use a mainstream mortgage.
• Priority groups may apply, commonly including key workers and/or people with a local connection, depending on the local authority policy.

Local criteria can be decisive. Many First Homes developments are restricted to buyers who live in the local area, have family there, or work locally. Some councils also prioritise certain occupations or require buyers to remain as owner-occupiers (i.e., the home is not intended as a buy-to-let investment).

Are you a “key worker”?

Key worker definitions vary, but may include NHS staff, teachers, police, firefighters, social care workers, and other public sector roles. If you think you qualify, gather proof early (employment contract, ID, payslips, HR letter) because developers and conveyancers often request it during the reservation and legal process.

Price caps and the “after-discount” price

Many areas apply price caps so that First Homes remain affordable. Importantly, the cap is usually applied to the market value before the discount (or sometimes to the discounted price, depending on local policy). Always ask the developer/agent to confirm:

• the open market value used,
• the discount percentage,
• the price you’ll pay after discount, and
• any local eligibility and price cap rules tied to the plot.

How does the First Homes discount work with mortgages?

In practice, the mortgage is based on the discounted purchase price, not the full market value. For example, if a home is valued at £300,000 and sold with a 30% discount, you pay £210,000. Your mortgage and deposit are assessed against £210,000.

However, your lender will still look closely at affordability—especially in 2026, where borrowers are often tested against higher “stress rates” and lenders pay close attention to ongoing commitments (credit cards, car finance, childcare, student loans, and discretionary spending patterns).

Deposit tips for First Homes buyers

• Plan beyond the headline minimum. While 5% deposits can be possible with some lenders, a larger deposit can improve rate choices and affordability outcomes.
• Check whether the discount affects LTV calculations. LTV is usually calculated using the purchase price, but lender policies can differ. A broker can match you to lenders experienced with discounted market sale properties.
• Keep evidence of deposit sources tidy. If you’re using a gifted deposit, get a gift letter and ensure funds are traceable to satisfy lender and solicitor requirements.

How to apply for First Homes: step-by-step

The exact application route varies by development and council, but the process typically looks like this:

1) Find a First Homes property

First Homes are usually available on specific new-build developments. You may find them via developers, local authority communications, or local estate agents. Ask explicitly whether plots are being sold as First Homes (Discounted Market Sale) and what the eligibility filters are.

2) Check the local eligibility rules early

Before paying a reservation fee, request the scheme information pack. Look for local requirements such as:

• local connection tests (residency/work/family),
• key worker priority,
• minimum/maximum household income,
• restrictions on letting/subletting, and
• resale rules and nomination periods.

3) Get an Agreement in Principle (AIP) and affordability check

Because First Homes is time-sensitive (new-build reservation deadlines can be tight), secure an Agreement in Principle and run a realistic affordability review. This is also the stage to identify any issues that commonly delay mortgages, such as variable income documentation, recent credit events, or probationary employment clauses.

4) Reserve the property (only when you’re confident you qualify)

You’ll typically pay a reservation fee to the developer. Confirm what happens if you are later found ineligible and whether the fee is refundable. Keep a paper trail of every eligibility assurance given.

5) Complete the First Homes eligibility application

Many schemes require buyers to complete an application that’s assessed by the local authority or a nominated agent. Expect to provide:

• proof of first-time buyer status (declaration and sometimes additional evidence),
• proof of income (payslips, P60s, accounts/SA302s for self-employed),
• proof of address and local connection, and
• proof of key worker status (if relevant).

6) Instruct a solicitor experienced in First Homes

First Homes purchases include legal restrictions (often secured via a planning obligation or covenant) to ensure the discount remains in place on resale. Choose a conveyancer who has handled discounted market sale transactions, and ask early how they’ll deal with the scheme paperwork and deadlines.

7) Submit the full mortgage application

Your lender will value the property, review documents, and issue an offer if everything meets criteria. With new builds, pay attention to:

• offer validity periods (and whether extensions are likely),
• build completion timescales, and
• any incentives that must be disclosed to the lender (e.g., upgrades, stamp duty contributions, deposit contributions).

8) Exchange and complete

Once your eligibility is confirmed, the mortgage offer is in place, and legal work is completed, you exchange contracts and later complete (often on notice for new builds). Ensure you understand the resale conditions—these can affect future plans such as moving, renting out, or staircasing (not applicable here, but relocation still matters).

Practical advice for 2026: common pitfalls to avoid

• Assuming all lenders treat First Homes the same. Policies vary, so mortgage broker support can save time and reduce the risk of last-minute declines.
• Not budgeting for full ownership costs. You own 100%, so plan for repairs, service charges (if leasehold), ground rent (where applicable and compliant), buildings insurance, and running costs.
• Overlooking resale restrictions. The discount stays with the property, which can affect who you can sell to and at what price formula—read the restrictions carefully.
• Missing deadlines. New-build reservations often require quick mortgage and legal progress; delays can risk losing the plot.

Is the First Homes scheme right for you?

If you’re a first-time buyer who wants full ownership and you meet the local and national criteria, First Homes can be a powerful route onto the ladder—particularly in higher-cost areas where the discount can materially reduce the mortgage needed. But it’s not a one-size-fits-all solution: local restrictions and resale rules mean it suits buyers planning to live in the home, rather than investors or those seeking maximum flexibility.

If you’d like, we can review your income, deposit, credit profile and the specific First Homes plot you’re considering, then match you to lenders comfortable with discounted market sale properties and new-build timelines.