Side hustles and gifted deposits persist as brokers await Budget detail on 2.5% deposits
More than 13% of first-time buyer applicants to online broker Mojo Mortgages over the past two years would be excluded from the government’s planned “Your First Home” scheme by reported household income caps, rising to over 22% in London and Greater London, according to the firm’s customer data.
Prime minister Andy Burnham announced the scheme on 26 September. It is expected to offer a 20% government equity loan on new-build homes in England, with an initial interest-free period, allowing buyers to purchase with a 2.5% deposit. Full details are due at the Budget on 28 October.
The income caps of £90,000 outside London and £110,000 in the capital are expected but unconfirmed, so Mojo’s figures are based on proposals. The firm said dual-income couples in high-cost areas would be hit hardest.
“Lowering the deposit barrier to 2.5% addresses one of the single biggest hurdles first-time buyers face – raising upfront cash while paying high private rents. However, introducing strict household income caps of £90,000 nationwide and £110,000 in London creates a delicate balancing act,” John Fraser-Tucker, head of mortgages at Mojo Mortgages, said.
“On one hand, targeting support at lower-to-middle income households ensures government backing goes to those without access to family wealth. On the other, two average working earners buying together, especially in high-cost regions, can easily cross these thresholds, effectively locking out working couples who are already squeezed by high property values.
“Based on Mojo Mortgages customer data over the last two years, over 13% of first-time buyer applicants would be excluded from the scheme due to these proposed income caps, this raises to over 22% of applicants in London and Greater London.”
Side hustles and gifted deposits
Mojo’s figures come from its own customers between September 2024 and September 2026. The scheme itself applies to England only, although Mojo refers to the caps as nationwide.
A Censuswide survey of 1,000 UK first-time buyers for Mojo in April found 64% rely on side hustles, from online reselling to freelance work, to build a deposit. Some 53% said the extra income cut two to three years from their wait. A further 22% admitted staying in a job they disliked to keep their income stable for a mortgage application.
Mojo data also shows about 26% of first-time buyers rely on gifted family deposits.
“While deposit relief is welcome, restricting eligibility based on income caps risks shifting the goalposts for dual-income couples who still struggle to save a 10% deposit without the ‘Bank of Mum and Dad’,” Fraser-Tucker said.
Five routes compared
Fraser-Tucker also set out the main alternatives, which brokers may find useful for client conversations.
The Lifetime ISA lets buyers under 40 save up to £4,000 a year with a 25% bonus, capped at £1,000. It can only be used on homes up to £450,000, and non-qualifying withdrawals cost about 6.25% of original savings. The government launched a consultation in June on replacing it with a First Time Buyer ISA, expected in April 2028.
First Homes offers new builds at 30% to 50% below market value, but availability is tight and the discount passes to the next buyer on resale.
The Mortgage Guarantee Scheme, made permanent in July 2025 as Freedom to Buy, supports 95% loan-to-value lending on open-market homes. Mojo noted these loans carry higher rates and tougher affordability checks, although many lenders offer 95% mortgages without the guarantee.
Shared ownership allows buyers to purchase a 10% to 75% stake and pay rent on the rest. A 5% deposit on a 25% share of a £250,000 home would be £3,125, Mojo said, but buyers pay 100% of service charges.
For Your First Home, Mojo said the equity loan would cut main mortgage borrowing to 77.5% loan-to-value and that repayment would be 20% of the property’s future value.
The Budget is expected to settle the caps and price limits. Until then, Mojo said joint applicants should check whether their combined salaries would breach the ceiling.
