Quick answer
You can use a Lifetime ISA to buy your first home if the property costs £450,000 or less, your first payment was at least 12 months earlier, you buy with a mortgage and your conveyancer requests the money.1 The government adds 25% to what you pay in, up to £1,000 a year on £4,000.2 Above £450,000 the withdrawal charge is 20% from 29 October 2026, which takes back the whole bonus, even though first-time buyer stamp duty relief still applies up to £500,000.
Key takeaways
- Open between 18 and 39; pay in up to £4,000 a year until 50; 25% bonus, up to £1,000 a year.2
- First home must cost £450,000 or less and be bought with a mortgage.1
- Your first payment must be at least 12 months before the purchase.1
- Your conveyancer or solicitor requests the money; it is paid to them, not to you.1
- Any other withdrawal before 60 costs 25% of the amount taken out.1
A Lifetime ISA is the only savings account where the government adds 25% to what you put in towards a first home. On £4,000 a year that is £1,000 free, every year. The catch is a set of purchase rules, and the price cap has not moved since 2017.
This guide covers the Lifetime ISA rules as they stand for 2026/27 and how they interact with first-time buyer stamp duty relief in England and Northern Ireland. The Budget on 28 October 2026 confirmed that a First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029; the government still has to legislate for it, and existing Lifetime ISA holders can carry on under the current rules.6
What are the rules for using a Lifetime ISA on a house?
All of these must be true: the property costs £450,000 or less; you buy it with a mortgage (not a private loan from certain relatives); your first payment into the Lifetime ISA was made at least 12 months before; and a conveyancer or solicitor acts for you and receives the money from the provider.1
Each person using a Lifetime ISA must be a first-time buyer. Two first-time buyers can each use their own account on the same purchase.
How much can it add to your deposit?
The bonus is 25% of what you pay in, paid monthly, up to £1,000 a year on the £4,000 limit.2 The £4,000 counts towards your overall ISA allowance.
| Years saving £4,000 | You pay in | Bonus | Total before growth |
|---|---|---|---|
| 1 | £4,000 | £1,000 | £5,000 |
| 3 | £12,000 | £3,000 | £15,000 |
| 5 | £20,000 | £5,000 | £25,000 |
Excludes interest or investment growth. Two first-time buyers saving the maximum each for 5 years would have £50,000 before growth.
Worked example: a £400,000 first home vs a £460,000 one
Amira has saved £20,000 into a Lifetime ISA over five years and received £5,000 of bonus: £25,000 in total. She buys in England as a first-time buyer.
| £400,000 home | £460,000 home | |
|---|---|---|
| Lifetime ISA available | £25,000 | £25,000 |
| Withdrawal charge (20% from 29 October 2026) | £0 | £5,000 |
| Cash towards the deposit | £25,000 | £20,000 |
| First-time buyer stamp duty | £5,000 | £8,000 |
At £460,000 the Lifetime ISA cap is exceeded, so the money comes out as an unauthorised withdrawal, charged at 20% from 29 October 2026 (it was 25%).7 Stamp duty relief still applies because the price is under £500,000.
Above £450,000 she loses the whole £5,000 bonus but keeps all £20,000 of her own savings; under the 25% charge that applied before 29 October 2026 she would also have lost £1,250 of them. Pricing the search below £450,000, or saving into another account for the part above it, keeps the bonus.
How do the Lifetime ISA cap and stamp duty relief fit together?
They are different limits. First-time buyer stamp duty relief in England and Northern Ireland runs to £500,000: 0% up to £300,000 and 5% from £300,000 to £500,000.4 The Lifetime ISA cap is £450,000. So a first-time buyer between £450,000 and £500,000 still gets stamp duty relief but cannot use the Lifetime ISA without a charge: 20% from 29 October 2026, which takes back the bonus.7
In London and parts of the South East, typical first-time buyer prices are close to or above £450,000, so check the cap before you rely on the bonus.
Your First Home: a 20% equity loan in England from April 2027 (announced)
The Budget on 28 October 2026 announced Your First Home, a scheme of 20% equity loans for first-time buyers in England. Household income must be no more than £110,000 outside London or £140,000 in London. The price cap is £650,000 in inner London and £500,000 in outer London; elsewhere it will be set from local authority median prices. You need a deposit of at least 2.5% and no more than 15%.5
The loan is interest-free for five years, then the cost rises gradually; the rate after year five has not been published. Pre-registration opens by the end of December 2026, full applications from February 2027 and the first loans from April 2027.5 It is a loan, not a grant, so it has to be repaid, and the scheme still needs legislation before it opens.
The First Time Buyer ISA from April 2029 (announced)
The Budget also set out the replacement for the Lifetime ISA: contributions of up to £4,000 a year with a 25% government bonus, paid when you withdraw the money to buy a home worth up to £450,000, with the bonus capped at £20,000 in total and no upper age limit.5 The government will legislate before it launches in April 2029, so the details could still change.6
How to use it, step by step
1. Check your account has been open, with a first payment, for at least 12 months by the expected completion date.
2. Tell your conveyancer you are using a Lifetime ISA when you instruct them; not every firm handles it, and timings matter.
3. Your conveyancer completes the provider's declaration and requests the funds before exchange or completion, according to the provider's process.
4. The provider pays the money, including the bonus, directly to the conveyancer.
5. If the purchase falls through, the money can usually go back into the Lifetime ISA without a charge, within the provider's time limit.
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Frequently asked questions
What is the Lifetime ISA house price limit?+
£450,000 for the first home. It has not changed since the Lifetime ISA launched in 2017.
Do I need a mortgage to use a Lifetime ISA?+
Yes. GOV.UK says you must buy the home with a mortgage. Private mortgages from certain relatives do not count.
What happens if my first home costs more than £450,000?+
You can still withdraw the money for the purchase, but it counts as an unauthorised withdrawal. From 29 October 2026 the charge is 20% (it was 25%) if the purchase meets every other rule: on £25,000 that is £5,000, the same as the bonus, so you keep your own savings.
How long must the Lifetime ISA be open before buying?+
At least 12 months from your first payment into the account.
Is the Lifetime ISA being scrapped?+
New savers will get a First Time Buyer ISA instead from April 2029, as confirmed at the 28 October 2026 Budget; the government still has to legislate for it. If you already have a Lifetime ISA you can carry on using it under the current rules.
What is the Your First Home scheme?+
A 20% equity loan for first-time buyers in England, announced at the 28 October 2026 Budget. Household income caps are £110,000 outside London and £140,000 in London, the deposit is 2.5% to 15%, and the loan is interest-free for five years. First loans are due from April 2027, subject to legislation.
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OfficialThe figures and rules on this page are drawn from the official UK government sources below. Rates are the confirmed 2026/27 amounts. Each link opens the relevant official page in a new tab.
- GOV.UK: Lifetime ISA, withdrawing money and buying your first home www.gov.uk/lifetime-isa/withdrawing-money-from-your-lifetime-isa £450,000 limit, 12 months, mortgage, conveyancer, withdrawal charge.
- GOV.UK: Lifetime ISA overview www.gov.uk/lifetime-isa £4,000 a year, 25% bonus up to £1,000, open before 40.
- GOV.UK: Tax-free savings newsletter 19 (November 2025) www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025 Budget 2025: new first-time buyer ISA to replace the Lifetime ISA.
- GOV.UK: Stamp Duty Land Tax residential rates (first-time buyers) www.gov.uk/stamp-duty-land-tax/residential-property-rates First-time buyer relief: £300,000 nil band, £500,000 limit.
- HM Treasury: Budget 2026 (28 October 2026), chapter 6.1 and paragraph 7.20 www.gov.uk/government/publications/budget-2026-document/budget-2026-html Your First Home equity loans; First Time Buyer ISA (£4,000 a year, 25% bonus, £450,000 home, £20,000 bonus cap).
- HM Treasury: Budget 2026, Overview of tax legislation and rates (OOTLAR), 2.3 and 2.4 www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/budget-2026-overview-of-tax-legislation-and-rates-ootlar First Time Buyer ISA legislation before launch in April 2029.
- legislation.gov.uk: The Individual Savings Account (Amendment) (No. 3) Regulations 2026, SI 2026/1130 www.legislation.gov.uk/uksi/2026/1130/made In force 29 October 2026: 20% charge where a first-home withdrawal fails only the price cap; 25% for any other withdrawal.
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