For many would-be homeowners in Ireland, the challenge isn’t just saving for a deposit – it’s qualifying for enough mortgage finance to match real-world house prices. Over the past decade, property prices have grown faster than wages, and rising rents have made it harder to save. Even buyers with strong incomes often find that the amount banks are willing to lend falls short of the cost of suitable homes.

The First Home Scheme (FHS) was introduced to tackle this affordability gap. By providing state-backed shared equity support, it helps first-time and fresh-start buyers secure their new home sooner, without overstretching their finances.

What is the First Home Scheme and Why Does It Exist?

Launched in 2022 as part of Ireland’s Housing for All strategy, the FHS is designed to make buying a home more achievable for those who can afford monthly repayments but can’t bridge the difference between their mortgage approval and house prices.

It’s a shared equity scheme, meaning the state (and in some cases, participating banks) take an equity stake in your property – usually up to 30% of the purchase price, or 20% if you’re also using the Help to Buy Scheme. You retain full ownership and occupancy of the home, but the state has a financial interest, which you can choose to buy out later.

Who Runs the Scheme?

The scheme is delivered by the Department of Housing, with support from participating lenders (AIB, Bank of Ireland, PTSB, and others) and is administered through the First Home Scheme DAC, which handles applications, contracts, and ongoing management of the state’s equity share.

How Does It Work?

When you qualify for the FHS, the state steps in to cover the shortfall between your maximum approved mortgage amount and the property’s purchase price. This allows you to buy the home you need without having to compromise significantly on size or location.

For example, if you’re purchasing a €350,000 home but your lender can only approve €300,000 based on your income and the Central Bank’s lending rules, the FHS could provide €50,000 in shared equity. Over time, you can choose to buy out the state’s share in full or in part, or leave it in place until you sell or remortgage.

It’s important to note that you’ll pay a small service charge on the equity portion from year 6 onwards, but no interest is applied. The scheme is designed to be flexible, with no obligation to repay the equity stake early, though you can do so at any time.

Who is Eligible?

You may qualify for the FHS if:

  • You are a first-time buyer, or a fresh-start buyer (for example, you previously owned a home but no longer do due to divorce, insolvency, or similar circumstances).
  • You have secured a mortgage from a participating lender, covering at least 70% of the property price.
  • You’re buying a new-build home or apartment within local authority price caps (which vary by county and are reviewed twice yearly).
  • You’re planning to live in the property as your principal private residence.
  • You are not buying an investment or rental property – this scheme is strictly for owner-occupiers.

Benefits of the Scheme

The First Home Scheme can make a significant difference by:

  • Bridging the affordability gap: Covering up to 30% of the cost where your mortgage approval falls short.
  • Reducing the mortgage amount: Lower monthly repayments compared to borrowing the full purchase price.
  • Providing flexibility: You can buy out the state’s equity stake at any time, in full or in stages.
  • Combining with Help to Buy: You may use both schemes together, though combined support is capped at 30% of the property’s price.

Points to Consider

Before applying, it’s important to understand that:

  • You won’t initially own 100% of your home outright – the state has a shared equity stake.
  • The value of the equity is linked to market value. If your home increases in value, the amount you need to repay to buy back the state’s share also rises.
  • A service charge applies from year 6 onwards on the equity portion.
  • Price caps and availability vary by local authority area, limiting which properties qualify.
  • The FHS requires a minimum contribution of 2.5% of the property value, meaning very small gaps between your mortgage approval and purchase price may not qualify.

Speaking to a broker early helps you understand whether the scheme is suitable and how it affects your long-term finances.

Steps to Apply for the First Home Scheme

  1. Check your eligibility: Work with a mortgage advisor to confirm you meet the scheme’s criteria and local price caps.
  2. Secure mortgage approval: You must have Approval in Principle from a participating lender before applying.
  3. Review scheme documentation: Understand how shared equity works, the buy-back process, and potential future costs.
  4. Apply via the First Home Scheme portal: Submit your application online with all required documents, including proof of mortgage approval and property details.
  5. Sign legal agreements: Your solicitor will guide you through the equity stake contract alongside your mortgage documents.
  6. Complete your purchase: The scheme funds are transferred to your solicitor to help close the sale.

Illustrative Case Study: How the FHS Can Close the Gap on Affordability

For illustration purposes only

Aisling is a teacher returning to Ireland after several years working abroad. She’s ready to buy a €320,000 new-build apartment in Cork but faces two challenges:

  1. Her bank approves a €280,000 mortgage, leaving a €40,000 gap.
  2. Because she’s only been paying Irish income tax for the past two years, her Help to Buy refund is limited to €10,000, based on her tax record.

Aisling also has €10,000 in personal savings, which she uses towards the deposit. That still leaves €20,000 unaccounted for.

The First Home Scheme steps in with a €20,000 equity contribution (6.25% of the property value), allowing Aisling to complete the purchase. The state holds a shared equity stake for this portion of the property.

Later on, when Aisling’s finances have improved, she can choose to buy out the 6.25% equity stake at a market-adjusted rate, giving her full ownership of the property in her own time.

(This is a fictional example for illustrative purposes only. Actual HTB refunds, FHS contributions, and lender approvals vary by individual circumstances, tax history, and local price caps.)

Talk to Us About the First Home Scheme

If you’re struggling to bridge the gap between what you can borrow and current house prices, the First Home Scheme might make your purchase possible. At EDUC Mortgages, we specialise in helping buyers maximise both the Help to Buy Scheme and the First Home Scheme, using your savings and available supports to bridge affordability gaps and plan for future buy-out of shared equity.

Contact us today for clear, personalised advice on how these schemes can work together to secure your new home.