ISA Rules for First-Time Buyers: What Applies?

The ISA that gov.uk links to a first home is the Lifetime ISA: for the 2026-27 tax year it adds a 25% government bonus on payments of up to £4,000, and its savings can go towards a property costing £450,000 or less. Other ISAs, such as a cash ISA, can also hold deposit savings, but they have no bonus.

The site's rules data was last checked against gov.uk on 26 September 2026. Figures typed in this guide may not yet reflect a later change, and the descriptions of gov.uk pages are summaries that may also lag. The current figures are on the ISA rules at a glance page. General information only, not financial advice.

Which ISAs can first-time buyers use?

gov.uk says you can save tax-free with ISAs, with a limit of £20,000 for the 2026-27 tax year across all the ISAs a person pays into (GOV.UK ISA overview). The four types it lists are cash, stocks and shares, innovative finance and Lifetime ISAs. Any of them can be used for saving. Only the Lifetime ISA is described by gov.uk as a way to buy a first home: you can use a Lifetime ISA to buy your first home or save for later life (GOV.UK Lifetime ISA overview).

gov.uk's Help to Buy ISA page says you can still open a Lifetime ISA to save for a first home (GOV.UK Help to Buy ISA page). The pages read for this guide do not give the Help to Buy ISA closing date, bonus or property limits, so this guide does not state them. Check that page for the current position.

What are the Lifetime ISA rules for a first home?

The government adds a 25% bonus to savings, up to a maximum of £1,000 per year, and you can put in up to £4,000 each year until you are 50 (GOV.UK Lifetime ISA overview).
To open one you must be 18 or over but under 40, and resident in the UK or a member of the armed forces or a Crown servant (who can open a Lifetime ISA).
To use the savings towards a first home, the property must cost £450,000 or less, the purchase must be at least 12 months after the first payment, a conveyancer or solicitor must act for you, and you must be buying with a mortgage (withdrawing money from your Lifetime ISA).

A Lifetime ISA can be held as cash, as stocks and shares, or as a mix. Whether the bonus is credited monthly or on another schedule is not stated on the pages read, so ask the provider.

A worked example: how much could build up?

The figures are assumptions for the arithmetic, not a forecast. Sophie pays £2,200 a year into a cash Lifetime ISA for five years.

Paid in: £2,200 × 5 = £11,000.
Bonus at 25%: £550 a year × 5 = £2,750.
Total before interest: £13,750.

If Sophie's partner, James, does the same, the pair would have £13,750 × 2 = £27,500 between them, before interest. Interest would be added on top at whatever rate the provider pays, which can change. The Lifetime ISA calculator can run other amounts, and its results are illustrations, not forecasts.

What if the home is bought with a partner?

gov.uk says that if the person you are buying with has a Lifetime ISA, you can both use your savings and government bonus, as long as you both are first-time buyers and both meet the first-home conditions. The pages read do not say how a purchase is treated when only one buyer is a first-time buyer, so ask both providers and the conveyancer before exchanging contracts.

gov.uk also says you cannot use Lifetime ISA savings if the private mortgage comes from a relative (parent, grandparent, child, grandchild or sibling), or from certain people connected to them or to your spouse or civil partner.

How does a Help to Buy ISA fit with a Lifetime ISA?

gov.uk says two things on the Lifetime ISA pages: you can transfer money from a Help to Buy ISA to a Lifetime ISA, and if you transfer money from a Lifetime ISA to a Help to Buy ISA you have to pay the 25% withdrawal charge (GOV.UK Lifetime ISA guide). It also says that if you have a Help to Buy ISA as well as a Lifetime ISA, you can only use the government bonus from one of them to buy your first home. Because the two schemes have their own rules, ask both providers how they apply to a particular purchase.

Does the ISA wrapper change the tax on deposit savings?

gov.uk says you can save tax-free with ISAs. Outside an ISA, gov.uk says savings interest above your allowance usually attracts Income Tax on the excess. The Personal Savings Allowance is £1,000 for a basic-rate taxpayer, £500 for a higher-rate taxpayer and £0 for an additional-rate taxpayer (GOV.UK: how much savings interest is tax free).

An assumed example: a higher-rate taxpayer with £30,000 in a savings account at an assumed 4% earns £1,200 in interest. If the £500 allowance is otherwise unused, £700 is above it, and Income Tax of 40% on £700 is £280. In a cash ISA the same interest would be inside the tax-free wrapper. The size of the difference depends on income, balances and rates. See is ISA interest taxable? for more.

What is not guaranteed?

A Lifetime ISA does not guarantee a mortgage offer. The pages read say nothing about lending, and a lender sets its own requirements, so ask a lender or mortgage adviser.
A withdrawal for another reason attracts a 25% charge, and if the whole pot is withdrawn it applies to the total including the bonus. On an assumed £13,750 pot that is £3,437.50, leaving £10,312.50, which is less than the £11,000 paid in.
A stocks and shares Lifetime ISA can fall in value, including close to the purchase date. A cash version does not move with markets, subject to the provider's terms and any FSCS cover.
A home costing more than £450,000 does not meet gov.uk's first-home conditions.
The bonus, the limits and the property cap are set by the government and can change.

How can a Lifetime ISA be combined with other ISAs?

The £4,000 Lifetime ISA limit counts towards the £20,000 allowance, so the rest of the allowance can go into other ISA types, and gov.uk says the allowance can be split across several accounts (how ISAs work). The ISA calculator and the Advanced ISA Planner show illustrations of how contributions could add up, including a partner saving alongside.

What to check and questions to ask

Is the account a Lifetime ISA, a cash ISA or another type, and what does the provider offer?
Does the age window, 18 to 39, and the UK-residence rule apply?
Is the target property at or under the £450,000 limit?
Will the purchase fall at least 12 months after the first payment?
If a Help to Buy ISA is held, how do the two accounts work together for the purchase?
For the conveyancer and a mortgage adviser: how are Lifetime ISA funds released, and at what stage of the purchase?

Frequently asked questions

Can I use a Lifetime ISA and a Help to Buy ISA on the same house?

gov.uk says that if you have both, you can only use the government bonus from one of them to buy your first home. Ask both providers how they apply to a particular purchase.

Can both people in a couple use their Lifetime ISAs?

gov.uk says that if the person you are buying with has a Lifetime ISA, you can both use your savings and bonus, provided you are both first-time buyers and both meet the first-home conditions.

Can I move a Help to Buy ISA into a Lifetime ISA?

gov.uk says you can transfer money from a Help to Buy ISA to a Lifetime ISA. Moving money the other way, from a Lifetime ISA to a Help to Buy ISA, means paying the 25% withdrawal charge.

Can I use a Lifetime ISA if a relative provides the mortgage?

gov.uk says you cannot use the savings if the private mortgage comes from a relative (parent, grandparent, child, grandchild or sibling), or from certain people connected to them or to your spouse or civil partner.

This guide does not constitute financial advice. Your personal situation, tax position, and savings goals may mean different strategies are appropriate. Consider speaking to a regulated financial adviser if you are uncertain.