Lower earners face high borrowing under Your First Home scheme, Tembo says

The Your First Home scheme may still be out of reach for lower earners in three-quarters of the English cities studied, according to analysis from digital savings and mortgage platform Tembo, even though it allows a 2.5% deposit.

Tembo's Q3 2026 First-Time Buyer Index modelled the scheme across 17 cities. Under its terms, eligible first-time buyers could purchase participating new-build homes with a 2.5% deposit and a 20% government equity loan, with a mortgage covering the remaining 77.5%. Tembo said its modelling was illustrative, as final scheme details have not been confirmed.

The platform found the typical time needed to save a deposit would drop from 34 months for a standard 5% deposit to 18 months. The largest reductions were in London, at 40 months, and Brighton, at 32 months.

However, buyers on lower local salaries, at the 25th percentile, would need to borrow more than 4.5 times their income to buy an average new-build in 13 of the 17 cities. In London that figure reached 9.9 times salary, compared with 8.7 times in Leeds, 8.4 times in Newcastle and 8.2 times in Leicester. Only Birmingham, Stoke-on-Trent, Liverpool and Southampton kept lower earners under the 4.5 times threshold.

Because the scheme covers only new-builds, Tembo said buyers would face higher prices in many areas. The average first-time buyer new-build across the cities costs £236,750, which is £9,809 more than the average first-time buyer home. In Newcastle the modelled purchase price is 67% higher than the typical first-time buyer home, and in Leeds it is 50% higher, which limits the deposit saving to just five months in Newcastle.

Richard Dana, chief executive and founder of Tembo, said: "The challenge simply shifts from saving enough to borrowing enough." He urged the government to address affordability and to consider changes to first-time buyer Stamp Duty relief and the Lifetime ISA.