The First Home Scheme (FHS) is a shared equity scheme, supporting first-time buyers and those building their first home by aiming to bridge the gap between their deposit and mortgage.
Launched in July 2022, the scheme provides first-time buyers with an equity facility where the price of the new home or new build falls within property price ceilings around the Republic of Ireland.
The scheme works via the Government and participating banks paying up to 30% of the cost of the new home, in return for a stake in it. This stake can be purchased back at any time, but it doesn’t have to be.
Who is eligible for the First Home Scheme?
This scheme can be availed of by anyone in the Republic of Ireland who are:
- First-time buyers, and certain other people who want to purchase a new home
- People who want to build their first home on a site they own, and certain other people who want to build a new home (as of September 2023)
- People who want to buy the home that they are renting because their landlord is selling it (falling under the Tenant Home Purchase Scheme).
Who qualifies for the First Home Scheme?
1. You must be buying your first home, or be deemed a ‘fresh start applicant’
This means not having previously bought or built a property, and not owning or having an interest in any property in Ireland or abroad. You are a fresh start applicant if you’ve previously owned a home but no longer have a financial interest in it as a result of:
- Divorce, separation or the end of a relationship
- Having gone through personal insolvency or bankruptcy
However, if you are a fresh start applicant and are buying and building a property with someone else, they must also be a first-time buyer or fresh start applicant.
2. You must be over the age of 18
As well as being over 18 years old, you have the right to live in Ireland.
3. You must live in the property, and it must be new
A requirement of the scheme is you must be building or buying the property to be your home, and therefore you must live in it as your only place of residence.
If buying a property, it must be a newly-built home and in a private development. If building your own home:
- The property must be built on a site which you own, or will be buying to own.
- The property must be a detached or semi-detached house.
- The build must be managed by you, or a contractor.
The scheme only covers the purchase of second-hand homes where you want to buy a property that you are renting, and your landlord is selling it.
4. The home must be in the price range for the area
Each local authority area across the country has its own price limits, which the cost of the new home must fall under. This limit is different depending on whether it’s a house or an apartment.
The limits set in each local authority is linked to the average house price for first-time buyers area by area, and they are reviewed regularly and changed from time to time.
For example, in Waterford City and County, the price limit for buying a house is €375,000 and for buying an apartment is €450,000 [as of April 2024]. You can view the limits here.
5. You must have a deposit, and your mortgage must be with a participating lender
Your mortgage lender must be participating in the scheme. The participating lenders include Bank of Ireland, Permanent TSB and Allied Irish Bank – including AIB, Haven Mortgages and EBS [as of April 2024].
You are required to borrow the maximum amount available to you from one of these lenders. For first-time buyers, this is usually 4 times your gross annual income. For non-first-time buyers it is 3.5 times.
You are also required to have a deposit of at least 10%, so if buying, this is 10% of the property’s purchase price. Those that are availing of the Help-to-Buy Scheme can use this to contribute towards it.
If you are building your own home, this represents 10% of the build cost. The equity in your site can be used to contribute to the deposit in this instance.
You can check your elgibility for the scheme using this calculator on the First Home Scheme website.
What funding is available, and what are the repayment terms?
In return for giving up the proportionate stake in the property, you can get up to 30% of the market value of your new property with the scheme – reduced to 20% if also availing of the Help-to-Buy Scheme.
The minimum amount you can avail of is the higher of 2.5% of the property price or €10,000.
Are there any charges?
In the first 5 years, there is no charge for the First Home Scheme. If you have not bought out the FHS equity scheme by the sixth year however, a service charge will apply.
This service charge is for the maintenance of the scheme, and is a percentage of the amount that the scheme paid at the time of purchase of the home.
This service charge increases in increments the longer you stay in the scheme:
- 1.75% for years 6 to 15
- 2.15% for years 16 to 29
- 2.85% for years 30 and over
These rates are fixed for the life of the equity facility and the service charge can be paid yearly or monthly.
Can the equity shared be bought back in the future?
Yes. While it is entirely optional, this can be bought back at any time, and can be done fully or partially.
The equity share is a percentage of the market value of the home. Therefore, if property prices increase, the amount you have to pay back will increase and vice versa.
For example, if your property was purchased for €315,000 in 2022 and the equity share was 10% (or €31,500), but the property value is €370,000 in 2024, the full repayment of the equity share is now €37,000.
More information about this is available at firsthomescheme.ie.
How do I apply for the First Home Scheme?
You can apply here: https://application.firsthomescheme.ie/main.
