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Saving a deposit is one of the biggest challenges for first-time buyers. A Lifetime ISA, often called a LISA, can help eligible savers build a deposit while receiving a government bonus.
The rules are straightforward in principle, but the account has age limits, contribution limits, a first-home price cap and withdrawal charges that buyers need to understand before relying on it.
What is a Lifetime ISA?
A Lifetime ISA is a tax-free savings or investment account for people saving to buy their first home or to support their finances later in life.
The government adds a 25% bonus to eligible contributions, up to a maximum bonus of £1,000 a year. You can contribute up to £4,000 per tax year, and this counts towards your overall ISA allowance.
Who can open a Lifetime ISA?
You must be aged 18 or over and under 40 to open a Lifetime ISA. Once open, you can continue paying in and receiving the bonus until you reach age 50, subject to the account rules.
You normally need to be a first-time buyer to use the money for a home purchase. This means you must not have previously owned a residential property anywhere in the world.
What are the Lifetime ISA rules for buying a first home?
You can use your Lifetime ISA savings and bonus to buy your first home without a withdrawal charge when:
- the account has been open for at least 12 months from your first payment;
- the property costs £450,000 or less;
- you are buying with a mortgage; and
- a solicitor or conveyancer acts for you and receives the funds directly from the provider.
The property must be bought for you to live in. A Lifetime ISA cannot normally be used for a buy-to-let property or holiday home.
What changed for properties above £450,000?
From 29 October 2026, a first-time buyer using a Lifetime ISA for a property costing more than £450,000 is subject to a 20% withdrawal charge. This is lower than the standard 25% charge for other unauthorised withdrawals, but it still means the buyer will not receive the full value of the savings and government bonus.
For example, if a Lifetime ISA contains £10,000 and the money is withdrawn for an eligible first-home purchase above the £450,000 cap, a 20% charge would reduce the amount available to £8,000. Buyers should check the latest guidance and speak to their conveyancer before committing to a purchase.
When can you withdraw money without a charge?
Charge-free withdrawals are generally available when you use the money for an eligible first-home purchase, when you reach age 60, or if you are terminally ill with less than 12 months to live.
Other withdrawals normally attract a 25% charge. This can leave you with less than you originally paid in because the charge applies to the withdrawn amount, including the government bonus.
How much could a Lifetime ISA add to your deposit?
If you pay in £4,000 during a tax year, the government bonus could add £1,000, giving you £5,000 before any interest or investment growth. Couples who are both eligible first-time buyers may each use their own Lifetime ISA for a purchase, subject to the rules applying to each account.
A Lifetime ISA is not a substitute for a full buying budget. You will also need to allow for legal fees, surveys, mortgage costs, moving expenses and any other costs connected with the purchase.
Should you use a Lifetime ISA?
A Lifetime ISA may be useful if you are eligible, expect to buy a qualifying home and can leave the money invested for at least 12 months. It may be less suitable if you could need the savings for another purpose or if the homes you are considering are likely to exceed the £450,000 cap.
Before opening or using an account, compare the terms offered by providers and consider whether cash savings or investments are appropriate for your circumstances. This article is general information and not financial advice.
What should first-time buyers do next?
- Check whether you meet the age and first-time buyer requirements.
- Confirm when the 12-month period begins from your first payment.
- Build a complete budget, including costs beyond the deposit.
- Check the likely price of the property you want to buy.
- Ask your mortgage adviser, solicitor or conveyancer how the funds will be requested.
Related Emoov guides
Stamp Duty for First-Time Buyers
Read more property guides from Emoov
Rules and thresholds can change. This guide reflects UK government guidance available in November 2026. Check the latest official information and obtain regulated financial advice before making decisions about a Lifetime ISA.
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