Mojo warns income caps could shut out first-time buyers

Mojo Mortgages said proposed income caps in the planned Your First Home scheme would exclude some first-time buyers. More than 13% of its first-time buyer applicants over the past two years would not qualify, it said.

The comments come amid wider debate about the proposed government-backed scheme, outlined as a successor to Help to Buy. Under the proposal, buyers of eligible new-build homes would be able to purchase with a 2.5% cash deposit, backed by a 20% equity loan.

Mojo said the impact of the policy would depend heavily on the final eligibility rules, particularly the reported household income caps of £90,000 outside London and £110,000 in the capital.

Based on its customer data, those limits would exclude a notable share of applicants, despite them still struggling to put together a deposit. In London and Greater London, the proportion of first-time buyer applicants shut out would rise to more than 22%, according to Mojo.

John Fraser-Tucker, Head of Mortgages at Mojo Mortgages, said: "Lowering the deposit barrier to 2.5% addresses one of the 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 earners buying together, especially in high-cost regions, can easily cross these thresholds, effectively locking out working couples already squeezed by high property values.

"Based on Mojo Mortgages customer data over the last two years, more than 13% of first-time buyer applicants would be excluded from the scheme because of these proposed income caps. In London and Greater London, that rises to more than 22%.

"While deposit relief is welcome, restricting eligibility through 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 proposed scheme is one of several routes available or under discussion for people trying to buy their first home with a small deposit. Mojo compared it with the Lifetime ISA, the First Homes scheme, the Mortgage Guarantee Scheme and shared ownership.

Deposit pressure

High house prices relative to earnings continue to shape how buyers approach the market, the broker said. According to Mojo's internal data, nearly 26% of first-time buyers currently rely on gifted family deposits to complete a purchase.

Its survey of first-time buyers also pointed to the lengths some households go to in order to save. Mojo said 64% relied on side hustles, including online reselling and freelance work, to build a deposit, while 53% said that extra income had cut two to three years from their saving period.

It also found that 22% of respondents admitted staying in a toxic job to preserve income stability for a mortgage application. Those findings add to concerns that even where low-deposit products exist, affordability tests and deposit requirements still present a barrier.

Other routes

Among the alternatives, the Lifetime ISA remains one of the main savings tools for younger buyers. The product allows first-time buyers under 40 to save up to £4,000 a year and receive a 25% government bonus, though the property purchase price is capped at £450,000 nationwide.

Mojo said that limit sharply restricts its usefulness in London and parts of the South East, where many entry-level properties exceed the threshold. It also noted that withdrawals for non-qualifying purposes trigger a 25% charge, which can leave savers with less than they originally put in.

The First Homes scheme offers discounts of 30% to 50% on selected new-build properties for local buyers and key workers. But stock remains tight because access depends on local authority allocations and participating developments, Mojo said.

For buyers looking beyond new-build homes, the Mortgage Guarantee Scheme supports lenders offering 95% loan-to-value mortgages across the wider market. This gives buyers more freedom over property choice, though usually at higher interest rates than lower loan-to-value borrowing, according to Mojo.

Shared ownership remains another option, particularly for single earners and households with modest deposits. Under that model, buyers purchase an initial share in a property and pay rent on the rest, although they remain responsible for full service charges and maintenance costs.

Debate around the planned Your First Home scheme is likely to focus on who it helps most: lower-income households without family support, or a broader group of working buyers who can afford monthly repayments but struggle to save enough upfront. Mojo's analysis suggests that if the income caps remain as reported, some dual-income households in expensive areas would still be left outside the scheme despite facing the same deposit pressures as lower-earning buyers.