Earnings limit of up to £140K for first-time buyers loan scheme

Households earning up to £110,000 a year will be able to apply for the government's new Your First Home loan scheme in England, with a higher £140,000 limit for buyers in London, according to the BBC.

The scheme offers government-backed equity loans worth 20% of the price of new-build homes bought from participating developers. The loans come with an initial interest-free period and are aimed at helping buyers get on the ladder with deposits as low as 2.5%.

As first reported by The Times, ministers had originally considered lower caps — £90,000 outside London and £110,000 in the capital — but raised them after concluding the lower limits would shut out too many middle-earning couples such as teachers and nurses.

Unlike earlier schemes, eligibility is tied to household income. Previous initiatives faced criticism for pushing up house prices by letting relatively wealthy households borrow more.

Unveiling the scheme at last month's Labour conference, Prime Minister Andy Burnham said it would focus on those who "really need support". Full details, including the salary caps, are due at next week's Budget.

The government says the programme will also support housebuilding, after ministers admitted they are on course to miss a target of 1.5 million new homes in England by the next election. Labour says the scheme will be funded from existing budgets but has not yet said where spending will be cut, while participating developers will be asked to help cover running costs.

The model mirrors Help to Buy, which ran from 2013 to 2021 and let buyers put down a 5% deposit on new-builds worth up to £600,000, with up to 20% funded by an interest-free shared equity loan for the first five years.