Quick Summary
What it is: The First-Time Buyer ISA is a new government-backed savings account launching April 2028, designed exclusively to help first-time home buyers accumulate deposits with a 25% government bonus
No withdrawal penalty: Unlike the Lifetime ISA's 25% penalty, the FTB ISA has no penalty if you withdraw early; you simply forfeit the government bonus
No upper age limit: Anyone aged 18+ who is a first-time buyer can open an FTB ISA, removing the current LISA restriction of 18-39 years old
How you contribute: Save up to £4,000 per tax year (expected, under consultation). Money grows tax-free.
In June 2026, the government officially named the product that will replace the Lifetime ISA: the First-Time Buyer (FTB) ISA. Launching around April 2028, this new savings account is designed to help first-time homebuyers accumulate a deposit with a generous government bonus. But how does it actually work? Who’s eligible? And should you wait for it, or open a Lifetime ISA now?
This guide covers everything you need to know about the FTB ISA, based on the government’s formal consultation published in June 2026.
What Is the First Time Buyer ISA?
The First-Time Buyer ISA is a new savings account designed exclusively for people saving to buy their first home. It’s not a pension, not an investment product, and not a general savings account; it’s a government-backed savings vehicle with a specific purpose: helping first-time buyers accumulate a deposit faster.
The key innovation is the government bonus. Save money into your FTB ISA, and the government will top up your savings with a cash bonus when you complete your home purchase. This bonus is paid directly towards your deposit or first home costs.
The FTB ISA is still being refined through the government’s consultation process. Some details outlined here are confirmed; others remain subject to final government decision. We’ll update this guide as further details are published.
Unlike the current Lifetime ISA (which serves both home buyers and retirement savers), the FTB ISA has a single purpose: buying your first home. This simplified design is what makes it different.
How the First Time Buyer ISA Works
The Basics: Save, Earn Bonus, Buy Home
The Government is consulting on offering both Cash and Stocks & Shares versions, similar to the current Lifetime ISA. This means you’ll have flexibility in how your money is held and grown.
The FTB ISA works in three stages:
Stage 1: Save
You deposit money into your FTB ISA account. There’s an annual contribution limit (expected to be £4,000 per tax year, though this is still under consultation). Any interest earned in a Cash FTB ISA or investment growth in a Stocks & Shares FTB ISA will be free from UK Income Tax and Capital Gains Tax, in line with normal ISA rules. This tax-free status comes from the ISA wrapper itself, regardless of whether your money is held as cash or invested.
Stage 2: Earn Government Bonus
For every pound you save, the Government will contribute a bonus when you buy your home. The exact bonus percentage is expected to be 25% (matching the current LISA), but this is still under consultation. This means a £4,000 contribution could attract a £1,000 government boost, paid as a lump sum when you complete your purchase.
Stage 3: Use for First Home Purchase
When you exchange contracts on your first home, you withdraw your savings plus the government bonus and use them towards your deposit or purchase costs. The money is yours, tax-free.
Annual Contributions and Limits
Contribution limit (under consultation): The Government is consulting on an annual contribution limit expected to be similar to the current £4,000 Lifetime ISA limit, but this has not yet been confirmed. Final confirmation will come once the consultation period ends.
Government bonus (under consultation): The expected bonus is 25% of contributions (which would amount to up to £1,000 per year if the £4,000 limit remains unchanged). However, this percentage is still under consultation and has not been finalised.
Total potential over 5 years:
– Your contributions: £20,000
– Government bonus: £5,000
– Tax-free growth on both (investment-dependent)
– Total accessible for purchase: Approximately £25,000-£27,000 (depending on whether your money is in cash or invested)
The government has not yet finalised the annual contribution cap or bonus percentage. Final confirmation will come once the consultation period ends and legislation is drafted. We’re expecting more detail by end of 2026.
