The Lifetime ISA gets most of the attention when people talk about government help for first-time buyers, but it isn't the only route into homeownership backed by the state. Several other schemes exist to help people buy with a smaller deposit or at a more affordable price — each aimed at a slightly different kind of buyer.
Mortgage guarantee schemes
A mortgage guarantee scheme works by having the government guarantee to cover part of a lender's losses if a borrower defaults on a high loan-to-value mortgage — typically a 95% mortgage, meaning just a 5% deposit. This encourages lenders to offer these low-deposit products, which they might otherwise see as too risky, without the buyer needing a special savings product or meeting income limits in the way some other schemes require. It's open to both first-time buyers and existing homeowners buying a residential property, subject to price caps and normal affordability checks.
First Homes scheme
First Homes is a scheme aimed squarely at local first-time buyers and key workers priced out of their area. New-build homes are sold at a discount — typically 30% to 50% below open-market value — with the discount locked into the property permanently through a legal restriction, so it's passed on to future first-time buyers when the home is eventually resold. Eligibility generally requires being a first-time buyer, having a household income below a set cap, and often a local connection to the area or a priority group such as key workers.
Shared ownership
Shared ownership lets you buy a percentage of a property — often starting from around 10% to 25% — and pay rent on the remainder to a housing association. Over time you can "staircase" up, buying further shares until you own the property outright (or close to it). It requires a much smaller deposit than buying outright, since the deposit is only needed on the share you're purchasing, but you'll pay both a mortgage and rent, and there are often restrictions on subletting or making alterations.
Comparing the main options
| Scheme | Best suited to | Key feature |
|---|---|---|
| Mortgage guarantee (95% mortgage) | Buyers with a small deposit but stable income | Government-backed guarantee to the lender, not the buyer |
| First Homes | Local first-time buyers, key workers | Discount of 30-50% locked into the property permanently |
| Shared ownership | Buyers who can't afford full market value or a full deposit | Buy a share, pay rent on the rest, staircase over time |
| Lifetime ISA | Long-term savers under 40 building a deposit | 25% government bonus on savings toward a first home |
Common misconceptions
- "These schemes are only for people on very low incomes." Several, including mortgage guarantee schemes, have no income cap — they're about deposit size, not income
- "Shared ownership is a bad deal because I'll never own the whole property." Staircasing allows full ownership over time, though costs (legal fees, valuation fees) apply at each stage
- "First Homes properties are the same as any other new-build." The resale discount restriction stays with the property, which affects the price you can eventually sell for
What to do next
Check eligibility for each scheme on GOV.UK and with local housing associations, since availability varies significantly by region and new-build development. A mortgage broker who deals regularly with these schemes can also help you understand which lenders participate and how the numbers work out for your specific income and deposit.