Government programs to help buy a home

Check which scheme is right for you

With a range of government schemes available to make buying a home more affordable, use our tool to find out which scheme is right for you.

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The mortgage guarantee scheme

Launched on 19 April 2021, the mortgage guarantee scheme helps to increase the supply of mortgages for borrowers with just a 5% deposit.

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Shared Ownership

Shared Ownership is a part rent, part buy scheme that will enable you to buy a share of between 10-75% of a new build home and then pay rent on the rest.

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First Homes

First Homes is a new scheme to help local first-time buyers and key workers buy a first home, by offering homes at a discount of at least 30%. 

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Right to Buy

A government scheme to help eligible council tenants in England buy their rented home with a discount of up to £87,200 (£116,200 in London).

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Stamp Duty

If you purchase a residential property before 30 June 2021, you only start to pay stamp duty on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.

Most assistance comes in the form of first-time home buyer grants and loans offered at the state and local levels. There may even be funds available from the private sector and nonprofits where you live.

Grants

The most valuable form of down payment assistance is the grant. That’s because grants provide money that homeowners never have to repay – it’s considered a gift.

An important word of warning here is that some programs that are labeled grants by the organization doing the funding may actually create a second lien on your home. While there’s nothing inherently wrong with this as long as you know what you’re getting into, make sure to carefully read the terms associated with any agreement for down payment assistance. You’ll also want to make sure your lender is aware of the grant, otherwise you might end up with a “silent” second mortgage.

Forgivable Loans (At 0% Interest)

Forgivable mortgage loans are second mortgages that you won’t have to pay back as long as you stay in a home for a set number of years.

These loans come with an interest rate of 0%. Participating lenders will forgive them, meaning that owners won’t have to pay them back, after a certain number of years. Often, lenders will forgive the loan after 5 years, but they do have the option of not forgiving these loans for a longer period, even up to 15 or 20 years.

However, you’ll have to repay these loans if you move before the forgiveness period ends. For instance, if your loan officer says it will forgive your loan after 5 years and you move, refinance your loan or sell your home in 4 years, you’ll have to pay back all or a portion of your forgivable loan.

This second mortgage will usually be large enough to cover your entire down payment.

Deferred-Payment Loans (At 0% Interest)

You might also qualify for a second mortgage with a deferred payment. You don’t have to repay these second loans for an amount large enough to cover your down payment, until you move, sell, refinance your first mortgage or pay down your first loan.

However, these loans are never forgiven, so you’ll have to repay them if you ever leave your home. You’ll usually do this through the proceeds from selling your residence.

Low-Interest Loans

Your lender or another organization might offer you the opportunity to take out a second mortgage loan at the same time your first mortgage is finalized. You can use the funds from this loan to cover your down payment. You’ll have to repay this loan each month, usually when you make your payments on your first loan. This means you’ll be making two mortgage payments each month.

The goal is to nab a low interest rate on these loans. Some lenders or organizations might offer these second loans with no interest at all.

Matched Savings Programs

Matched savings programs, otherwise known as individual development accounts, are another way for homeowners to help pay for their down payments. In such programs, home buyers deposit money into an account with a bank, government agency or community organization. That institution agrees to match however much the buyers deposit. Buyers can then use the total amount of funds to help cover their down payments.

For instance, buyers might deposit $5,000 into an account. The bank, government agency or community organization with which they are working will then add $5,000 more into the account. The buyers can use this $10,000 to cover the cost of their down payment.

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