First Homes is a government-run scheme in England designed to help first time buyers get on to the property ladder by offering discounted housing prices.
How does the First Homes England scheme work?
Your clients can get big discounts on house prices of between 30% and 50% (compared to the market price set by an independent valuer) if they’re eligible for the First Homes scheme. Once the discount has been applied to a property, it will be passed on when the property is sold, so that future first time buyers can also benefit from the scheme.
Your clients will need to have at least 5% of the discounted price available to put down as a deposit, and a mortgage in place for at least 50% of the discounted price.
Visit the government website to see more about the First Homes scheme.
Who is eligible for the First Homes England scheme?
National criteria (everyone must meet this):
- all applicants must be first time buyers
- their household income must not exceed £90,000, if London based, or £80,000 if outside London
- they will need to have a mortgage (or home purchase plan) in place for at least 50% of the discounted purchase value.
Local authorities can also apply their own criteria:
- the authority may set a lower income cap if they can provide evidence it’s needed
- they might apply a local connection test based on residency, employment in the local area or a family connection (serving members of the armed forces, recent veterans and their families will be exempt from local connection tests)
- they might want to prioritise key workers for the scheme.
How we can make things easier for you
If your clients are eligible for First Homes, we have a range of mortgages that could be suitable for them, including mortgages that only require a 5% deposit. We’re also here to answer your questions about First Homes, or any of the other affordable housing initiatives we support.
Key Policy:
- When submitting a First Homes mortgage application in eMortgages, please select the loan type as 'standard purchase' and NOT 'discounted purchase'.
- The LTV is based on the loan amount and the purchase price (discounted amount).
- New build houses and flats are acceptable to 95% LTV (these will all be new build to start with but in time will be resold on the second hand market).
- Where there is a new build incentive of less than 2% the maximum LTV is 95% for houses and flats.
- AVM and desktop valuations are not available on First Homes England mortgage applications.
- Maximum Loan to Income (LTI) limits are as follows:
- Income of £50,000 or less, or LTV over 90% - max LTI = 4.49
- Income of £50,000 - £80,000, or LTV over 90% with income over £100,000 - max LTI = 4.75
- All other residential lending (LTV of 90% or less and income under £80,000) - max LTI = 5.
- Standard Automated Income Verification (AIV) policy applies.