How do mortgage deposits in Ireland work?

Before you can get a mortgage to buy a home in Ireland you’ll need a deposit. Here’s how they work and how much you’ll need to have saved.

What is a mortgage deposit?

It’s the money you need to put towards buying a property alongside the money you get from a mortgage.

For example, if you contribute €50,000 towards buying a property worth €250,000 you have a 20% deposit. The remaining 80% (€200,000) you would need to borrow using a mortgage, this is also called your loan to value.

Asking you to put down a deposit on a property protects mortgage lenders if you fall behind on your repayments, and reduces their risk of lending.

What deposit do you need to get a mortgage?

In Ireland you need a deposit of at least:

  • 10% if you’re buying your first home
  • 20% if you’ve owned a property before
  • 30% if you’re buying a property to rent out

The size of your deposit will also have an affect on the mortgages you’ll be eligible for:

  • If you have a small deposit it may restrict how much choice you have when you come to look for a mortgage.
  • If you have a larger deposit, you can access the cheapest mortgage rates on the market and get the best deals.

Saving for a deposit

It can take a little while to save up enough money for a deposit to buy your first home.

While there is no one best way to save up for a mortgage deposit, some things you could do to speed things up include:

  • Downsizing or moving in with friends or family to save money on rent
  • Switching your household bills like your energy or broadband to cut costs
  • Setting up a standing order each month to get into the habit of saving
  • Reviewing your existing borrowing, to make sure it’s not costing more than it needs to
  • Reviewing your savings to check they’re earning as much as they can
  • Changing your spending habits e.g. fewer takeaways and meals out

It’s also worth considering setting a goal. Work out how much you need to save each month to hit your target and stick to it.

Help with your mortgage deposit

Saving a mortgage deposit can take a long time, but there are some ways to get help towards the cost.

Help to buy

If you’re a first-time buyer purchasing a new build home in Ireland, you could qualify for the Help to Buy incentive.

The scheme ordinarily offers a tax rebate worth up to 5% of the purchase price of your property.

However, the value of the scheme has been temporarily increased to a maximum of €30,000 or 10% of the purchase price of the property, whichever is the lesser, until 31 December 2022.

You can find out more about the Help to Buy incentive and how to apply on the Citizens Information website.

Help from your family

Many borrowers in Ireland get financial help from their parents or other family members to buy their first home.

If you’re getting money from a family member towards your deposit you’ll also need a letter confirming it’s a gift from the person giving you the money. This letter should be signed and include:

  • How much money is being given
  • The name of the person giving the gift
  • A statement that you don’t need to pay back any of the money
  • A statement that the person giving the gift will have no claim on the property

It’s also worth checking if there are any tax implications, as large gifts could potentially fall within the scope of gifts and inheritance tax.

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Mortgage deposit FAQs

Can I get a loan for my deposit?

No, the funds being used as a deposit for a mortgage application in Ireland cannot be borrowed.

All lenders in Ireland check the Central Credit Register as part of the application process, which includes all the details of all personal mortgage, overdrafts, loans, and credit cards, so if you’ve taken out a loan to use for your deposit, they’ll decline your application.

Can I get a mortgage with no deposit?

No, you can’t get a mortgage in Ireland without putting down a deposit.

Central Bank rules require first time buyers to have a minimum 10% deposit and non-first-time home buyers a minimum 20% deposit.

Lenders can make exemptions to these deposit requirements, but there is a limit to the number of exemptions they’re allowed to make so they’re not very common.

If you qualify, the Help to Buy scheme could also help towards your deposit if you’re buying your first home. The rebate it offers is equivalent to 5% of the purchase price, effectively reducing the amount you need for a deposit to just 5%.

Can I use a gift for a mortgage deposit?

Yes, you can usually use a gift from friends or family towards your deposit, but there are some rules that you’ll need to be aware of.

Many lenders ask for a gift letter if your deposit funds have been gifted to you, you can download a template gift letter from the AIB website.

What’s the best account to use for my mortgage deposit?

It’s a good idea to use a separate savings account while you’re saving for a mortgage, as this can help you earn the best interest rate possible and keep track on how much you have saved.

When it comes to transferring your funds to your solicitor you may need to move it to your current account first.

When do I have to pay the deposit?

You usually need to transfer the deposit funds shortly after signing your contracts. At this point you’ve legally agreed to buy the property and are in the process of completing the purchase.

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 16/05/2022