The Lifetime ISA for first-time buyers
The Lifetime ISA (LISA) is one of the most generous tools a UK first-time buyer has: the government tops up your savings by 25%. But it comes with strict rules — a property price cap, a minimum holding period, and a penalty if you use the money the wrong way. Here's exactly how it works in 2026.
What is a Lifetime ISA?
A Lifetime ISA is a savings or investment account designed to help you buy your first home or save for later life. You can open one between the ages of 18 and 39, and pay in until you're 50.
The headline benefit is a 25% government bonus on what you save — free money towards your deposit, provided you follow the rules below.
The bonus and the limits
You can pay in up to £4,000 each tax year, and this counts towards your overall £20,000 ISA allowance for the 2026 to 2027 tax year. The government then adds 25% on top — so the maximum bonus is £1,000 a year.
The bonus is paid monthly, based on what you contributed, and you keep earning it on new contributions right up until your 50th birthday. Over several years of saving the maximum, the bonuses add up to a meaningful chunk of a deposit.
- Pay in up to £4,000 per tax year
- Government adds 25% — up to £1,000 a year
- Counts towards your £20,000 annual ISA allowance
- Bonus paid monthly, until you turn 50
Using it to buy your first home
To put your LISA towards a purchase, the home must cost £450,000 or less (the same cap applies anywhere in the UK), you must be buying with a mortgage, and your first LISA payment must have been at least 12 months ago.
The money is sent directly to your conveyancer, not to you. If you're buying with a partner who also has a Lifetime ISA, you can both use your accounts and both bonuses on the same property — a big advantage for couples.
- Property price must be £450,000 or less
- You must buy with a mortgage and live there
- The LISA must have been open at least 12 months
- Two first-time buyers can combine two LISAs on one home
The withdrawal penalty to watch
If you take money out for anything other than a qualifying first home (before age 60, and outside of terminal illness), you pay a 25% government withdrawal charge. Because of how the maths works, that charge claws back the whole bonus plus a small slice of your own savings.
For example, if you save £1,000 and receive a £250 bonus, your balance is £1,250. A 25% withdrawal charge is £312.50, leaving £937.50 — so you'd get back less than you put in. The lesson: only put money you're confident you'll use for a first home (or retirement) into a LISA.
Frequently asked
Can my partner and I both use a Lifetime ISA on the same house?
What's the maximum property price for a Lifetime ISA?
Should I use a Help to Buy ISA or a Lifetime ISA?
How long do I have to wait before I can use it?
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Last updated: 1 July 2026 · Clinkeys is not a regulated advisor. For binding decisions, always confirm with a solicitor, broker, or surveyor.