Mortgages

The First Home Scheme explained

A new help to buy scheme in Ireland for first time buyers and other eligible borrowers could help you get on the property ladder, but what is it, and how do you apply? Here’s all you need to know about the First Home Scheme.

What is the First Home Scheme?

It’s a government-backed scheme to help first-time buyers buy a property. The First Home scheme (FHS) aims to make house purchase more affordable by supporting homebuyers with the cost of a new home.

The initiative, part of Ireland’s Housing for All strategy, is also open to those who’ve owned a property before and suffered insolvency or a relationship or family breakdown.

The scheme is available for eligible borrowers who are buying newly built houses and apartments and has recently been extended to self-builds in rural Ireland.

How does the First Home scheme work?

The FHS is designed to make up any shortfall between the house price and what you can afford to pay with a deposit and mortgage.

It’s a shared equity scheme that pays up to 30% of your house price in return for a stake in your property. You can buy back the share if you can afford to, but you’re under no obligation to do so.

For example, you find a property that cost €250,000, but with your deposit and mortgage, you can only raise €200,000. The FHS scheme would pay the extra €50,000 and then have a 20% share in your property.

You will need to fit the eligibility criteria, but there are no income limits, so your earnings are not considered when you apply.

The scheme is free for the first five years, but after that, you’ll have to pay a service charge fee on the amount the government gave you. You can pay this monthly or in full each year.

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6 key features of the FHS

  • It’s a shared equity scheme.
  • Funds up to 30% of the property purchase price.
  • For newly built properties in private developments
  • Local authority area price ceilings apply
  • You don’t need to pay it back
  • Service charges apply from year six

How much financial help can you get?

You can get up to 30% of your house price funded by the FHS, however, there are price caps, and the cost of your home must be within the price limit of the area.

These limits are based on the median price for first-time buyers in each local authority and change regularly.

Currently, the highest cap of €500,000 is on houses and apartments in Dublin and Cork. Lower caps of €325,000 apply in areas like Sligo, Donegal and Longford.

You can find the FHS maximum price ceilings in each area at firsthomescheme.ie

Increased price ceilings from January 2022 mean that every new house valued at €325,000 or less will be eligible for the scheme across Ireland.

Here’s an example

A first-time buyer couple with a combined salary of €80,000 and a deposit of €40,000 want to buy a property in Galway on the market for €350,000. The house price ceiling is €375,000.

The participating lender has offered a potential mortgage of €280,000 based on their salary, so minus the deposit, the shortfall is €30,000.

The FSH could potentially help by offering to meet a shortfall up to €112,500 (30%). In this instance, the couple will only need help with €30,000.

Are there any fees or extra charges?

Although it’s free for the first five years, from year six you’ll need to pay a service charge.

The charge covers maintenance of the First Home scheme and is a percentage of the government’s initial stake. You won’t be charged interest, because it’s not a loan.

The longer you stay in the scheme, the more you’ll pay.

Years Amount to pay
0-5 Nothing
6-15 1.75%
16-29 2.15%
30 and over 2.85%

You’ll also have to pay a valuation fee if you want to buy back all or part of the equity share.

Do you need to pay the money back?

No, not while you live in the property as your principal primary residence. However, you’ll also have to repay the scheme equity if you sell your house and move.

You’ll also have to pay it back if:

  • you buy a second home
  • you move out and rent the whole property
  • you switch your mortgage to a non-participating lender
  • you die (for joint applicants, the equity is only repayable upon the second death)

What happens if you want to move?

You will need to contact the FHS if you plan to sell your property. The equity share and any outstanding service charges must be repaid in full on the sale of the property.

Can you rent your home?

If you want to move out and rent your home, you’ll have to repay the equity share and any outstanding service charges because it will no longer be your principal private residence.

However, you can rent a room if you continue to live in your property under the terms of your customer contract.

Can you buy back the equity share in your home?

Yes, you can claim the government stake in your home by buying it back at any time.

You can buy back the full equity share in one payment, or buy it back as and when you can afford, to as a minimum of two part-payments per year.

If you are planning to make partial payments, the minimum amount you can pay back is 5% of the original equity amount.

How do you buy back the equity?

You’ll have to get your home valued if you want to buy back equity.

The valuation must be completed by an FHS Approved Valuer who will charge a fee. The valuation is valid for 12 months, so if you want to buy back over several years, you’ll need to get your home revalued.

Once you have the valuation report, you need to provide it to the FHS and request a ‘redemption quote’ which will outline what you need to pay and the next steps.

What if the house price increases?

The equity share in your home is a percentage of the market value of your home. So, if property prices increase, the amount you have to pay back will increase.

For example, if you buy a house for €350,000 and the FHS provides equity of 20% (€70,000) and you want to buy back the equity share when the property is valued at €400,000, you’ll pay 20% of the new price, which is €80,000.

Who qualifies for the First Home Scheme?

Check below for basic eligibility criteria or you can use the FSH Eligibility Calculator on the First Home Scheme website.

To be eligible for the scheme you must:

  • be over 18 years of age
  • be a first-time buyer or ‘fresh start’ homebuyer
  • have a minimum deposit of 10% of the property purchase price
  • have a Mortgage Approval with a participating lender
  • borrow the maximum amount available (up to 3.5 times your income)
  • not be availing of a Macro Prudential Exception (MPE) with a participating lender

The property you are buying must be:

  • a newly built house, apartment or self build in the Republic of Ireland
  • bought as your main, private residence
  • within the local authority property price ceiling for the property type

If you are making a joint application, both applicants must be a first-time buyer or fresh start applicant.

What is a first time buyer?

You’re a first time buyer if you:

  • do not own or have a stake in any property in Ireland or abroad
  • have not previously bought or built a property to live in
  • have not owned a home abroad or inherited a home
What is a ‘fresh start’ applicant?

You are a ‘fresh start’ applicant if you owned a home but you no longer have a financial interest in it because you:

  • are divorced or separated
  • have been through insolvency or bankruptcy

Which banks are taking part?

The Department of Housing, Local Government and Heritage is working in partnership with these participating lenders:

Compare mortgage rates & deals

Find the best first time buyer and home mover mortgage deals in Ireland using our comparison.

How do you apply for the First Home Scheme?

  1. Use the FHS eligibility calculator to check if you qualify
  2. Get a mortgage approval in principle
  3. Apply online on the FHS website
  4. Await assessment of eligibility and an estimate of funding
  5. Give your eligibility certificate to the lender
  6. Get full mortgage approval and letter of offer
  7. Upload your letter of offer to the customer portal
  8. Await your FHS customer contract

To get your FHS equity, your solicitor will send your signed contract and documents to the FHS, who will then transfer the money to your solicitor.

What documents do you need?

You’ll need to provide your personal details, solicitor contact details and information about the property you’re planning to buy.

Documents you’ll need to provide are:

  • Mortgage approval in principle
  • Photo ID for all applicants
  • Proof of address for all applicants (dated within the last 6 months)

To find out more about applying for a mortgage, visit our complete guide to mortgages.

What other help is available for first time buyers?

Help to Buy Scheme

The Help to Buy scheme started in 2017 to help first-time buyers buy newly built homes and self builds. Borrowers can claim a tax rebate of up to €30,000 or 10% of the value of the property. If you qualify, you can claim a refund of income tax and deposit interest retention tax (DIRT). Find out more at Revenue.ie.

Local Authority Home Loan

This is a Government backed mortgage for first time buyers or other eligible applicants through local authorities. All types of homes qualify, including those in the Tenant Purchase Scheme and Affordable Housing Scheme. You can borrow up to 90% of the market value of the property. Find out more at Local Authority Home Loan.

Local Authority Affordable Purchase Scheme

With this scheme, the local authority takes a percentage share in your home to covers the reduction in price. New, affordable homes under this scheme are located in areas with the greatest housing need. To qualify, your gross income must be below 85.5% of the market value of the home. Find out more on the LDA.ie website.

Mortgage Allowance Scheme

This allowance scheme assists tenants or tenant purchasers of local authority houses to become owner-occupiers. An allowance of up to €11,450 is paid to the lender over a 5-year period and repayments are reduced accordingly for the first five years of the mortgage. Find out more at gov.ie

Find out what you can afford to borrow with our mortgage calculators

How much can I borrow?

First Home Scheme FAQs

Is the First Home Scheme a loan?

No, it’s not a loan, so you don’t pay the money back. However, unless you buy back your share, the government will have a stake in your home.

What if I have a Mortgage Approval in Principle (AIP) already?

If you already have your mortgage approval in principle, the next step is to register on the FHS customer portal and complete your application. However, if you already have a Letter of Offer, you won’t be eligible for the FHS for that specific property.

Can I use the First Home Scheme with Help to Buy?

Yes, you can, but the maximum you’ll be eligible for is 20% of the property value. However, if you are planning to purchase a home with a Local Authority Home Loan, you will not be eligible for the First Home Scheme.

What is a cashback mortgage?

This type of mortgage gives you money back as a cash lump sum up[on completion. The cash is either a mortgage percentage, say 3% or a fixed lump sum, such as €1,000. It’s ideal for first-time buyers who need financial help at the start of their mortgage term. Read Should you choose a cashback mortgage for more information.

What is a Macro Prudential Exception (MPE)?

The Central Bank of Ireland (CBI) set a limit on the amount of money that can be borrowed to buy residential property using Loan to Value (LTV) and Loan to Income (LTI) limits, such as 4x your income.

However, banks and other lenders are given the freedom to lend a certain amount above this ceiling which is known as a Macro-Prudential Exception.

You cannot benefit from both, so it is best to get advice on the one that will help you the most.

Warning: If you do not keep up your repayments you may lose your home. Warning: The cost of your monthly repayments may increase. Warning: You may have to pay charges if you pay off a fixed rate loan early. Warning: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit in the future. Warning: The entire amount that you have borrowed will still be outstanding at the end of the interest-only period. The payment rates on this housing loan may be adjusted by the lender from time to time. (applies to variable rate loans only) Information provided and Interest rates quoted valid at 25/01/2023