More than 22% of first-time buyer mortgage applicants in London and Greater London could be excluded from Andy Burnham’s proposed ‘Your First Home’ scheme because their household incomes exceed its eligibility thresholds, according to Mojo Mortgages.
The online mortgage broker’s analysis of customer data from the past two years suggests that more than 13% of first-time buyer applicants nationwide would fail to qualify under the proposed income restrictions.
The scheme would allow eligible first-time buyers to purchase a property with a deposit of just 2.5%, compared with the 5% or 10% typically required for higher loan-to-value mortgages.
However, the proposals include household income limits of £90,000 outside London and £110,000 in the capital, potentially excluding couples whose combined earnings exceed those thresholds despite difficulties accumulating a deposit.
Mojo Mortgages warned that the restrictions could particularly affect dual-income households in areas where property prices remain high relative to earnings.
BUYERS TURN TO ADDITIONAL INCOME
Separate research from the broker highlights the measures prospective buyers are taking to raise deposits while meeting their existing financial commitments.
Its findings suggest that 64% rely on additional income from activities such as selling second-hand goods online or freelance work to accelerate their savings. According to Mojo, these activities can reduce the time needed to accumulate a deposit by two to three years.
Meanwhile, 22% of respondents reported remaining in jobs they regarded as toxic because they were concerned about maintaining stable employment and income for mortgage applications.
The research also found that 26% continued to depend on gifted deposits, underlining the role of family financial support in helping buyers enter the housing market.
CONCERNS OVER ELIGIBILITY
John Fraser-Tucker, head of mortgages at Mojo Mortgages, said reducing deposit requirements could help buyers struggling to save while paying private rents, but questioned whether the proposed income restrictions would exclude households that still needed assistance.
He said: “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.
“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 2 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.
“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’.”
The findings raise questions about how income-based eligibility would operate in higher-value housing markets, where households earning above the proposed limits may nevertheless face substantial deposit requirements.
