The First Time Buyer ISA: What we know so far

What is a First Time Buyer ISA?

First Time Buyer ISAs are a new savings product designed to help people get onto the property ladder and will eventually replace Lifetime ISAs. There are plans for two types of First Time Buyer ISAs: Cash First Time Buyer ISAs and Stocks and Shares First Time Buyer ISAs.

Like the Lifetime ISA (and the Help to Buy ISA that came before), eligible deposits into a First Time Buyer ISA will receive a tax-free bonus from the Government.

What’s more, as a type of Individual Savings Account (ISA), any returns will also automatically be tax-free.

How will it differ from a Lifetime ISA?

While First Time Buyer ISAs and Lifetime ISAs will share similarities, there are some key differences to be aware of:

Who will be eligible?

UK residents aged 18 and over will be eligible for the First Time Buyer ISA – even if they already have a Lifetime ISA (although they’ll only be able to pay into one of these accounts per tax-year).

To claim the bonus, they must also:

• Have held their account for a minimum of 12 months
• Purchase a property with a legal mortgage (i.e. they can’t be a cash buyer or use unregulated forms of financing)
• Plan to use the property as their main residence.

When will it launch?

It hasn’t been confirmed when the new First Time Buyer ISA will go on sale, however, some have speculated it could launch in April 2028.

What hasn’t been confirmed yet?

As well as the launch date for the new First Time Buyer ISA, there are some other details the Government is yet to confirm, including the:

Subscription limit

The subscription limit is the maximum amount of money a saver can add to an account each tax-year. For reference, savers can deposit up to £4,000 per tax-year into a Lifetime ISA and up to £200 per month in a Help to Buy ISA.

While the First Time Buyer ISA subscription limit is still unknown, the Government has confirmed that any deposits will count towards a saver’s annual ISA allowance. Importantly, contributions to a cash First Time Buyer ISA will also be considered part of their cash ISA allowance (which is set to be lowered to £12,000 per tax-year for under-65s from 6 April 2027).

Property price cap

The Government also hasn’t revealed the maximum price of a property that can be purchased using a First Time Buyer ISA.

The threshold currently stands at £450,000 for properties bought with a Lifetime ISA – a figure that has drawn criticism for failing to rise in line with house prices, particularly in London where the average first-time buyer paid nearly £472,000 in June 2026 (according to data from Land Registry).

However, a report by the Treasury Select Committee said the house price cap was necessary to ensure that “Government spending supports those who need financial assistance the most”. “Any increase in the price cap is an increase in Government spending,” it explained.

Bonus rate

Both the Help to Buy ISA and Lifetime ISA offer a 25% top-up from the Government. However, a lower subscription limit and/or property price cap could allow the First Time Buyer ISA to offer an even bigger bonus, for example, which the Government said “would shift the benefits towards lower income savers outside London and the South East”.

That’s why, as part of its public consultation, the Government asked whether the First Time Buyer ISA should seek to rebalance the relationship between the subscription limit, price cap and bonus, and if there should be a lifetime cap on the bonus received (as well as the annual limit).

Will I be able to transfer an existing ISA to a FTB ISA?

Whether you’ll be able to transfer your existing ISA to the new First Time Buyer ISA depends on the type of account you hold.

• Lifetime ISAs: Transfers from a Lifetime ISA to a First Time Buyer ISA won’t be allowed, as the ways each account applies the Government bonus are incompatible.

• Help to Buy ISAs: The Government is proposing that savers should be able to transfer their Help to Buy ISA to a First Time Buyer ISA (up to the subscription limits).

• Cash ISAs: Savers will be able to transfer funds in a cash ISA to a First Time Buyer ISA. This won’t affect their annual ISA allowance but will count towards their First Time Buyer ISA subscription limit.

• Non-cash ISAs (e.g. Stocks and Shares ISAs and Innovative Finance ISAs): Transfers from non-cash ISAs will only be allowed to Stocks and Shares FTB ISAs. This is to prevent savers from finding ways to circumvent to the new, £12,000 yearly limit on cash ISA deposits that comes into effect from 6 April 2027 for those under the age of 65. The new rules also mean savers won’t be able to transfer funds from a Stocks and Shares FTB ISA to a cash ISA (including Cash FTB ISAs).

Should I open a Lifetime ISA now or wait for the First Time Buyer ISA?

Instead of waiting for the First Time Buyer ISA to become available, eligible savers could consider depositing a small amount of money into a Lifetime ISA now so they have the option to use the account in the future – even after it’s no longer on sale. The Government has confirmed it will remain possible to open a Lifetime ISA until the First Time Buyer ISA hits the market, and that savers can continue adding to their account (in line with existing rules) indefinitely.

Just remember that you won’t be able to transfer any money held in a Lifetime ISA to a First Time Buyer ISA once available. However, you should be able to use funds in an existing Lifetime ISA, as well as those in the new First Time Buyer ISA, for the same purchase (subject to any new terms and conditions).

It’s also important savers take stock of their current situation before applying for either account, as this could inform their decision. For instance, a Lifetime ISA is unlikely to be the best fit for someone planning to buy a home above the £450,000 price cap as there’s a 25% charge on non-qualifying withdrawals. Meanwhile, both Lifetime ISAs and the yet-to-be-released First Time Buyer ISA must be open for at least 12 months before savers can access the Government bonus – meaning they’re not necessarily the most suitable choice for those looking to purchase a property in the immediate future.

As an alternative, savers could explore traditional savings accounts or cash ISAs.