First Homes Scheme Discount & Deposit

The Discount

How the First Homes Discount Works

The First Homes discount reduces the purchase price, which in turn reduces the deposit you need in cash. Here is how the numbers work and what happens to the discount when you sell.

⭐ Most Popular for First-Time Buyers

The Minimum 30 Percent Discount

The First Homes Scheme requires developers to sell designated properties at a minimum 30 percent discount to the market value. Local authorities can set a higher discount, up to 50 percent, if they choose to. The discount is applied to the open market valuation at the time of sale, not to the developer's asking price for comparable full-price units. For example, if a new build property has a market value of 300,000 pounds and the First Homes discount is 30 percent, you buy it for 210,000 pounds. The 90,000 pound saving is significant. You need a mortgage based on 210,000 pounds, not 300,000 pounds, and your deposit is calculated on the discounted price too.

Advantages

The discount is subject to a maximum purchase price cap. Currently, the property must have a market value of no more than 420,000 pounds in London and 250,000 pounds elsewhere, after the discount has been applied. This means the pre-discount value can be higher than these figures.

Considerations

The property is independently valued before you complete. The First Homes discount is applied to this valuation, not simply to the developer's advertised list price for the unit.

Standard Variable Rate

How Your Deposit Is Calculated

Your deposit is calculated as a percentage of the First Homes discounted price, not the full market value. So if you are buying at 210,000 pounds with a 10 percent deposit, you need 21,000 pounds. If the same property were at full market value of 300,000 pounds, a 10 percent deposit would be 30,000 pounds. The scheme therefore reduces the cash deposit required significantly.

Advantages

Mortgage lenders who accept First Homes applications will lend against the discounted price. You do not need to fund the discounted element yourself. The lender simply bases the mortgage on what you are paying.

Considerations

Not every mortgage lender offers products for First Homes properties. Those that do will require sight of the discount documentation as part of the application. We work with the lenders who are active in this space and can make sure your application goes to the right place.

Popular with Short-Term Buyers

What Happens When You Sell

When you come to sell a First Homes property, the same percentage discount must be passed on to the next eligible buyer. If you bought at a 30 percent discount and the property has gone up in value to 350,000 pounds at the time of sale, you must sell it at 245,000 pounds, which is 30 percent below the new market value. You benefit from the same proportion of the increase in value, but not the full uplift.

Advantages

You must sell to another eligible First Homes buyer. If no eligible buyer is found within three months, there is a process through which the local authority or Homes England can purchase the property. Understanding this restriction before you buy is important for your longer-term planning.

Considerations

The discount and the resale restriction are recorded on the title of the property through a legal charge. Your solicitor will explain this at the time of purchase. It cannot be removed or extinguished without specific authorisation.

We are registered with the FCA and arrange mortgages on First Homes properties regularly. If you have questions about how the discount works in practice, get in touch.

Less Common for First-Time Buyers

Does the Discount Affect Your Mortgage?

Not every lender will mortgage a First Homes property. Those that do lend against the discounted purchase price, not the full market value. The mortgage is structured as a standard residential mortgage on the amount you are paying. The existence of the discount and resale restriction is noted on the title but does not restrict your ability to get a mortgage from lenders who operate in this space.

We work with the lenders who are actively accepting First Homes applications and can get your mortgage arranged alongside the purchase. The process is slightly longer than a standard new build purchase because of the additional legal documentation required, but the fundamental mortgage process is the same.

For details on who qualifies and what the eligibility requirements are, see our First Homes eligibility page.

You may also find our pages on First Homes pros, cons and costs and other government home buying schemes useful if you are still weighing up your options.

Get in touch to talk through your First Homes purchase with no obligation. We will run through the numbers with you and confirm which lenders are accepting applications.

First Homes Discount and Deposit

How the First Homes Discount Works

The Minimum 30 Percent Discount

How Your Deposit Is Calculated

What Happens When You Sell

Does the Discount Affect Your Mortgage?

Useful Calculators

Related Guides

First Homes Discount and Deposit

How the First Homes Discount Works

The Minimum 30 Percent Discount

How Your Deposit Is Calculated

What Happens When You Sell

Does the Discount Affect Your Mortgage?

Useful Calculators

Related Guides

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