Get a quote
Menu

Lifetime ISA (LISA): how does it work, and can you use it to buy your first home?

Have a Lifetime ISA (LISA)? Find out how the 25% government bonus works, who qualifies, the price caps and when your conveyancer can claim it.

Katrina Lamont, Director of Legal Operations (HOLP)

Last updated 10 Nov 2026

Text Spacer

Read time 5 minutes

Key takeaways

Eden house

A Lifetime ISA (LISA) helps you save for your first home, with the government adding a 25% bonus to your savings. 

Eden house

You can save up to £4,000 a tax year and receive a maximum government bonus of £1,000 a year. 

Eden house

You must be aged 18 to 39 to open a LISA, and your first payment must be made before you turn 40. You can continue contributing and receiving the government bonus until you turn 50. 

Eden house

The government announced a new First Time Buyer ISA in the Autumn Budget 2026, planned for April 2029. Existing LISA holders can continue to use their accounts under the current rules. 

What is a Lifetime ISA?

Disclaimer: This article provides general information only and is not intended to constitute legal, financial, mortgage or tax advice. Eligibility depends on your individual circumstances and the scheme rules in force at the time of your purchase. You should check the latest government guidance and speak to your ISA provider, mortgage advisor and conveyancer before making any decisions. Information accurate as of November 2026.

If you're saving for your first home, a Lifetime ISA (LISA) could help you build your deposit faster. 

A Lifetime ISA, or LISA, is a type of individual savings account that gives you a 25% government bonus on the money you save. You can use it to buy your first home or save for your retirement. 

The bonus is a particularly useful benefit when you're trying to save for a deposit alongside paying rent, bills and the other costs of everyday life. 

For every £4 you save, the government adds another £1. That means if you save £4,000 in one tax year, you'll receive an extra £1,000, giving you £5,000 before any interest or investment growth. 

There are two main types of LISA: a cash LISA and a stocks and shares LISA. A cash LISA pays interest on your savings, while a stocks and shares LISA invests your money. Investments can rise or fall in value, so you may get back less than you have paid in. Which type, if either, is appropriate will depend on your circumstances.  

If you're planning to buy a home in the near future, it's worth understanding how the account works, when you can access your money and the rules you need to meet before you commit to using one. You may wish to take independent financial advice before choosing an account.  

Eden brand checkmark grey

How does a Lifetime ISA work?

You can open a LISA if you're aged between 18 and 39. Once your account is open, you can save up to a maximum of £4,000 each tax year and receive a 25% government bonus on your contributions.  

If you're using a Lifetime ISA to buy your first home, it can be used along with other Government schemes including Right to Buy, shared ownership and Help to Buy loans. 

With a LISA, you will receive the money in time for exchange on your property, meaning you can use it towards the deposit requested by the seller.  

LISA funds can be used towards the purchase price and may be available in time to contribute towards the deposit payable on exchange.  

There are a few limits to be aware of: 

  • Maximum annual savings: £4,000 
  • Government bonus: 25% of your contributions 
  • Maximum annual government bonus: £1,000 
  • Earliest age to open an account: 18 
  • Latest age to open an account: 39 (before your 40th birthday) 
  • Latest age to receive the government bonus: 49, with contributions ending at 50 

 

Here's how the bonus could add up towards your first home:  

 

Your yearly savings 

Government bonus 

Total 

£1,000 

£250 

£1,250 

£2,000 

£500 

£2,500 

£3,000 

£750 

£3,750 

£4,000 

£1,000 

£5,000 

 

You don't have to save the full £4,000 every year. You can contribute smaller amounts when you can afford to, and the government bonus will reflect how much you pay in. 

Eden brand checkmark grey

Who can use a Lifetime ISA?

An eligible person between the ages of 18 and 39 can open and use a LISA to save for their first home or their retirement. However, as a first-time buyer, there are restrictions on who can use a LISA. 

To qualify, you must: 

  • Be a first-time buyer, meaning you have never owned a property anywhere in the world. 
  • Be buying a home that you intend to live in, rather than a property to rent out. 
  • Be buying a property worth no more than £450,000. 
  • Have opened your first LISA more than 12 months before you wish to use it.  

The purchase must be funded using an eligible mortgage. LISA funds cannot be used for an entirely cash-funded purchase, and restrictions also apply to certain private mortgages involving relatives.  

You can buy a home on your own or with someone else. If you're buying with a partner and you both have LISAs, you may both be able to use your savings and bonuses towards the same property, provided you each meet the eligibility requirements. 

If you're buying with someone who has owned a property before, you may still be able to use your own LISA if you meet the rules. However, the other buyer won't qualify for the first-time buyer bonus on their own account. 

It's worth checking the full eligibility criteria before you make plans around your savings, particularly if you're buying with someone else or considering a property close to the price limit. 

Eden brand checkmark grey

What is the property price limit for a Lifetime ISA?

Under the standard LISA rules, the property you buy must cost £450,000 or less. The limit applies to the property's full purchase price, rather than just the deposit you're putting down. 

For example, if you're buying a property for £475,000 and wanted to use your LISA savings, you would normally pay a 25% penalty on withdrawing from the LISA under the standard rules. This means you lose 6.25% of your savings, as well as all of the government bonus, if you use your LISA savings for a home costing more than £450,000.  

However, the Autumn Budget 2026 announced a change for existing LISA holders. From 29 October 2026, the withdrawal charge for a qualifying first-home purchase above the £450,000 limit will fall from 25% to 20%. This change reduces the penalty, meaning you will retain your original contributions, although investment losses, gains and the precise timing of the bonuses may affect the amount returned.  

If you're buying a home above the price limit, check the latest rules with your LISA provider and conveyancer before arranging a withdrawal. 

Eden brand checkmark grey

When can you use your Lifetime ISA savings to buy a house?

One important thing to understand is that you can't open a LISA shortly before buying a home and immediately use the money. 

Your account must have been open for at least 12 months from the date of your first payment before you can make a qualifying first-home withdrawal. 

This means it's worth thinking about your LISA well before you start viewing properties, particularly if you're hoping to buy within the next year. 

Once you've found a property and your offer has been accepted, you can start arranging the withdrawal with your conveyancer. 

Here's how the process works: 

  • Tell your conveyancer you're using a LISA. Let your conveyancer know early in the purchase process that you intend to use your LISA savings. They'll explain what information they need from you and help coordinate the withdrawal with your provider. 
  • Provide your LISA details. You'll need to provide information about your account, your provider and the property you're buying, alongside a declaration confirming that you meet the eligibility rules. 
  • Your conveyancer requests the funds. Your LISA provider releases the requested money directly to your conveyancer once it has the necessary information and declarations. You don't withdraw the money yourself and transfer it to your conveyancer. 
  • The money goes towards buying your home. Your LISA savings, including the government bonus, can be used towards the purchase price. This can help you fund the purchase alongside your other savings and mortgage. 
  • Your conveyancer confirms completion. Once your purchase completes, your conveyancer informs the LISA provider in line with the scheme's requirements. 

It's important to coordinate the withdrawal with your conveyancer. If your purchase falls through or doesn't complete within the permitted timeframe, the funds normally need to be returned to the provider. The provider can then restore the funds to the account, preserving their tax-advantage status. Different requirements may apply where completion is delayed, so any extension should be arranged before the applicable deadline expires.  

Eden brand checkmark grey
Using a LISA or Help to buy ISA for your purchase?

Our conveyancers can guide you through the conveyancing requirements and help you coordinate the withdrawal process. 

Get a quote

What is the new First Time Buyer ISA?

In the Autumn Budget on 28 October 2026, the government announced plans to introduce a new First Time Buyer ISA from April 2029. The new account is intended to replace the LISA for new savers. 

The proposed scheme will retain the 25% government bonus, allowing eligible first-time buyers to receive a bonus on savings of up to £4,000 a year. The bonus will be calculated on the final account balance, subject to an overall government bonus cap of £20,000 and the property price limit of £450,000.  

The scheme is not available to buyers until April 2029, and details of how the scheme works may be updated before launch. You'll still be able to open a Lifetime ISA until then as well as continuing to deposit into and use your existing LISA or Help to Buy ISA after the new First Time Buyer ISA launches. 

Eden brand checkmark grey

Lifetime ISA (LISA) FAQs

  • A Lifetime ISA is a government-backed savings account that helps people save towards their first home or retirement. You can save up to £4,000 each tax year and receive a 25% government bonus, up to £1,000 a year.  

  • The government adds 25% to eligible savings, up to a maximum bonus of £1,000 each tax year. If you save £4,000, your total becomes £5,000 before interest or investment growth. 

  • Yes. You can use your LISA savings and government bonus towards your first home if you meet the eligibility criteria. Under the standard rules, the property must cost £450,000 or less, your first payment must have been made at least 12 months before the withdrawal, and you must intend to live in the property.   

  • Yes. You can buy with a partner or another person. If you both have LISAs and meet the eligibility requirements, you can both use your savings and bonuses towards the same property. If the other buyer has owned a property before, you may still qualify to use your own LISA, provided you meet the rules. 

  • Yes. Your LISA savings and bonus can contribute towards the purchase price of your first home. Your conveyancer will coordinate the withdrawal with your provider, so it's important to discuss the timing of the funds and any deposit payments with them. 

  • Yes, but not yet. The government announced in the Autumn Budget 2026 that a new First Time Buyer ISA is planned for April 2029. It will replace the LISA for new savers, but people who already hold a LISA will be able to continue using their accounts under the existing rules.