First Time Buyer ISA: what we know so far

What the Chancellor announced today

The replacement was first flagged in the November 2025 Budget. A Treasury consultation on the new product ran from June to 18 August 2026. Today’s speech confirmed the government is going ahead.

Three first-time buyer measures came out of the speech:

• A new First Time Buyer ISA to replace the Lifetime ISA
• An immediate change to how the Lifetime ISA withdrawal penalty works for buyers over the property price limit
• Funding of £4.7bn for Your First Home, a government equity loan scheme starting next spring

The Lifetime ISA penalty change

From today, Lifetime ISA savers who buy a home above the price limit will get back at least what they paid in. Until now, using the account for a home over £450,000 meant paying a 25% withdrawal charge, which wiped out the government bonus and took a slice of the saver’s own money too.

That cap has caught out many buyers in London, Kent and the wider South East, where £450,000 does not stretch far. The Chancellor’s change means those savers should no longer lose their own contributions.

We are waiting for the Budget documents to confirm exactly how this works, including whether any bonus or growth is kept. We will update this section when we know.

How the new First Time Buyer ISA is expected to work

The new account is built for one job: saving for a first home. Based on the summer consultation, the main differences look like this. The final design may still change.

The end of the upper age limit is a significant change. The average first-time buyer is getting older, and the Lifetime ISA closed the door to anyone who had not opened one before turning 40.

Your First Home equity loan scheme

Alongside the ISA news, the Chancellor confirmed £4.7bn of government-backed lending for Your First Home, starting next spring. It is aimed at first-time buyers who do not have family help with a deposit.

As announced before the Budget, the scheme covers certain new-build homes in England:

• 2.5% deposit from the buyer
• 20% equity loan from the government
• 77.5% mortgage from a lender

Income caps, regional price caps and the interest-free period on the equity loan are expected in the Budget documents. We will add them here once confirmed.

What it means if you hold a Lifetime ISA now

Your Lifetime ISA still works as it did, and you can keep paying in. Before the Budget, savers could continue to open and fund Lifetime ISAs until the new product launches, which some expect to be April 2028.

A few points to keep in mind:

• Under the consultation proposals, money in a Lifetime ISA cannot be moved into the new First Time Buyer ISA, because the two bonus systems work differently.
• If you are buying soon and your home is under £450,000, using your Lifetime ISA as normal is unaffected.
• If you are buying above £450,000, today’s penalty change could make your Lifetime ISA savings usable without losing your own money.
• Your conveyancer still needs to request the funds from your ISA provider in good time before completion.

We will confirm whether new Lifetime ISAs can still be opened, and for how long, once the Budget documents are published.

What we are still waiting to hear

These are the details we are watching for. We will update each one as it is confirmed.

• Launch date for the First Time Buyer ISA
• Annual savings limit and government bonus rate
• Property price cap, and whether it varies by region
• Cut-off date for opening new Lifetime ISAs
• Exactly how the Lifetime ISA penalty change works, and from when
• Your First Home income caps, price caps and equity loan terms