First-time buyers in 2026 have three government-backed routes onto the ladder, and they work in completely different ways. One lends you part of the price, one lets you buy part of a home and rent the rest, and one sells you a whole home at a discount. Picking the wrong one can cost you thousands — or leave you stuck in a home you cannot sell easily. Here is our first home scheme vs shared ownership comparison.
The three schemes at a glance
Your First Home Scheme is the newest route: buy with a 2.5% deposit, with the government providing a 20% equity loan on top of your mortgage. You own 100% of the home from day one, but the equity loan must be repaid when you sell, remortgage or reach the end of the term — and the amount you repay moves with your home’s value. Full eligibility details, including the income cap and price caps, are due to be confirmed in full at the Budget at the end of October 2026, so treat any detail beyond the deposit and loan percentages as provisional until then.
Shared Ownership is part-buy, part-rent. Under the newer model you buy an initial share of typically 10–75% of a home’s value, usually with a 5–10% deposit on the share (not the full price), and pay rent on the share you do not own — usually capped at 2.75% a year of the unsold share’s value. You can buy more shares later through staircasing, including 1% annual increments for up to 15 years on the newer model. Your household income must be £80,000 or less (£90,000 in London), and you must be unable to afford a suitable home outright.
First Homes sells eligible first-time buyers in England a new-build home at a discount of 30–50% off market value. You own 100% of the home, there is no rent on any share, but the discount stays in the title forever: when you sell, you must sell to another eligible buyer at the same percentage discount. The price after discount must be £250,000 or less (£420,000 in London), your household income must be £80,000 or less (£90,000 in London), and you need a mortgage for at least 50% of the discounted price. Councils can add local rules, such as a local connection or key-worker priority, usually for the first three months a home is marketed.
Monthly cost: the real difference
Shared Ownership is the only one of the three with rent built in: mortgage on your share, plus rent on the rest, plus service charges. That can still be cheaper than renting privately, but your total monthly bill needs all three lines added up — and the rent rises each year, by no more than CPI plus 1% on newer leases. With Your First Home, your monthly cost is the mortgage alone (the equity loan is interest-free at first, on the scheme’s published terms — check the final Budget terms), but your eventual repayment grows if house prices rise. With First Homes, your monthly cost is also just the mortgage, on a lower purchase price — but your gain when you sell is capped by the discount passing on.
Which one fits which buyer?
Choose Your First Home if you have a very small deposit (2.5%) but a solid income to support a larger mortgage, and you want to own 100% from day one. It suits buyers whose main barrier is the deposit, not the monthly payment.
Choose Shared Ownership if your deposit and income are both modest, and you are happy to start with a share and staircase over time. It is the most flexible entry point — a 10% share needs the smallest cash — but check the service charges and rent review terms in the specific lease before you commit.
Choose First Homes if you can find one where you want to live, you plan to stay for several years, and you are comfortable that your profit on sale will be limited by the discount. It suits buyers who value low monthly costs and full ownership over maximising a future gain.
Three traps to check before you apply
First, availability: First Homes and Shared Ownership only exist on specific homes, and First Homes in particular are limited in number. Second, resale rules: Shared Ownership resales often go through the housing provider first, and First Homes resales must stay in the scheme — both can slow a sale. Third, staircasing and equity-loan costs: buying more shares costs a valuation and legal fees each time, and repaying an equity loan means finding that money on top of your mortgage when you move. Run the deposit maths on our Affordability Calculator and read our full Your First Home Scheme guide before you choose.
One honest caveat: Your First Home’s full terms are still to be confirmed at the 28 October Budget. If you are choosing between these schemes, wait for those terms — or proceed with Shared Ownership or First Homes, whose rules are already settled. We will update this comparison once the Budget confirms the details.
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