With the cost of housing in Ireland at an all-time high in 2024, owning a first home can be both exhilarating and daunting.
Over the years, the Irish government has introduced several initiatives to assist first-time buyers, one of the most recent being the First Home Scheme.
This scheme is designed to make purchasing a home more feasible for those entering the housing market for the first time.
Buying a House in Ireland: A Step by Step Guide by a Builder/Solicitor
KEY TAKEAWAYS
| Key Point | Details |
|---|---|
| Eligibility Criteria | Age, income, first-time buyer status |
| How does the scheme Work? | See a detailed example for a better understanding |
| Application Process | Steps on how to apply, required documents |
| Participating Lenders | List of banks and financial institutions participating |
| House Price Limits per County | Extended specifics on the maximum house price your house must be to be eligible for the scheme |
| Other FAQS |
What is the First Home Scheme?
Introduced in 2022, the First Home Scheme (FHS) is a government-backed initiative aimed at helping first-time buyers in Ireland to purchase or self-build a new property with reduced financial stress.
The scheme allows eligible participants to own a home with a smaller deposit than typically required, while the government will co-own a portion of the house.
This scheme is currently available to new homebuyers up until 2025, with the potential to extend this timeframe.
***UPDATE – Since Januaury 2025, the Department of Housing and participating banks (BOI, AIB and PTSB) have expanded the scheme with an additional €280m, to bring available funds for first-time homeowners up to €680m in 2025.
How Does the Scheme Work?
Let’s say you’re earning €40,000 a year and you want to buy a home that costs €200,000.
You have the minimum deposit of €20,000, i.e. 10%.
Under the Central Bank’s mortgage lending rules for First-Time buyers, you can only borrow up to Four Times your income – €160,000 in this scenario.
So you now have 20,000+ 160,000 = 180,000.
That means you’re only missing €20,000 on the house.
Under the First Home scheme, the State will give you €20,000 in return for a 10% stake/part-ownership in your home.
How Much Funding can I get on the Scheme?
The minimum amount you can get is 2.5% of the property purchase price, or €10,000, whichever is higher.
You can also get up to:
- 30% of the market value of your new home.
- 20% if you are also using the Help to Buy Scheme
What Charges are Included?
There is no charge for the equity share for the first FIVE years of this scheme. From the beginning of year six, if the equity share is still in place, a service charge will be paid by you to the Government for the maintenance and servicing of the First Home Scheme.
The service charge increases the longer you stay in the scheme:
- 1.75% for year 6 – 15
- 2.15% for year 16 – 29
- 2.85% for year 30+
Read more on their website HERE.
How much stake in the house does the Government take?
The government’s stake is whatever percentage of the overall total that was provided by them.
In our previous example above, the State provided €20,000 of €200,000. So their equity stake on the house is 10%.
You can also repay or buy out this government stake in your home at any time if you wish. But you’re under no obligation to do so.
Who is Eligible for the First Home Scheme?
To be eligible for the Scheme you must:
- Be over 18 years of age
- Be a true first-time buyer or other eligible homebuyer*
- Use the home as your Principal Primary Residence
- Make sure the home is a qualifying property**
- Have Mortgage Approval with a Participating Lender – see further below.
- Borrow the maximum amount available to you from one of the Participating Lenders (up to 4 times your income)
- Not be availing of a Macro Prudential Exception (MPE)*** with a Participating Lender
- Have a minimum deposit of 10% of the property purchase price or build cost (for self-builds, equity in your site can contribute to your deposit.)
* Divorced, separated or gone through insolvency or bankruptcy.
**A qualifying property is a newly built house, newly built apartment, a Self-build on your own site OR a house or apartment you are currently renting and living in and now, looking to purchase as the landlord is putting the property on the market.
***An MPE is when your lender lets you borrow above the Central Bank limits ie, more than four times your annual salary/wage.
How to Use the Eligibility Calculator.
- Go to FHS Eligibility Calculator
- Select Single or Joint
- Select any of the below that correspond to your current situation
*You must be over 18 and a relevant first time buyer. Otherwise you cannot proceed with the application.
4. Confirm that your property is a qualifying property by choosing Yes
5. Select your relevant type of FHS funding you need
6. Confirm that the property is your Principal Private Residence by clicking Yes
7. Select the property type: House or Apartment
8. Select the Local Authority Area/ County. (See the house price limits for each county further below).
9. Add in your Property purchase Price
How to Apply for the First Home Scheme
- Assess Eligibility
Check if you meet the criteria using the Eligibility calculator link above. - Financial Review
Consult with a financial advisor or a bank to assess your financial status and borrowing capacity. - Find a Participating Lender
Currently, 5 banks and financial institutions partner with the scheme. See below. - Application Submission
Submit the necessary forms and documents as outlined by the chosen lender. - Approval and Purchase.
Once approved, you can proceed with the house purchase under the scheme’s guidelines.
FHS Participating Lenders & Banks
The primary lenders participating in the First Home Scheme include:
- Bank of Ireland
- Allied Irish Banks (AIB)
- EBS
- Haven Mortgages
- Permanent TSB
Each lender might have slight variations in how they implement the scheme, so it’s advisable to contact them directly for detailed information.
However, you MUST borrow the maximum amount available to you from one of these lenders.
House Price Limits for First Home Scheme per County.
As seen on Citizensinformation.ie
| Local Authority Area | Price Limits for Buying | Price Limits for Building |
|---|---|---|
| Cork City, Dublin City, Dún Laoghaire-Rathdown, Fingal, South Dublin | €475,000 for houses, €500,000 for apartments | €475,000 |
| Limerick City and County | €400,000 for houses, €450,000 for apartments | €400,000 |
| Waterford City and County | €375,000 for houses, €450,000 for apartments | €375,000 |
| Co Wicklow | €475,000 for all properties | €475,000 |
| Galway City | €450,000 for all properties | €450,000 |
| Co Cork, Co Kildare, Co Meath | €425,000 for all properties | €425,000 |
| Co Galway | €400,000 for all properties | €400,000 |
| Co Kilkenny, Co Laois, Co Louth, Co Westmeath | €375,000 for all properties | €375,000 |
| Co Clare | €350,000 for all properties | €350,000 |
| Co Carlow, Co Cavan, Co Donegal, Co Kerry, Co Leitrim, Co Longford, Co Mayo, Co Monaghan, Co Offaly, Co Roscommon, Co Sligo, Co Tipperary, Co Wexford | €325,000 for all properties | €325,000 |
Summary
The First Home Scheme is a helpful step towards homeownership. It does not only reduce the initial financial burden but also supports long-term homeownership among first-time buyers.
Knowing your eligibility and understanding the application process are crucial in taking full advantage of this scheme.
Secure your future with a stable investment and embrace homeownership through the First Home Scheme.
Start planning today.
Other Useful FAQS
What other initiatives has the Irish Government introduced to help first time buyers?
- Help to Buy Scheme
- Local Authority Home Loan
- SHared Ownership Scheme
- Local Authority Affordable Purchase Scheme
Are there other learning resources available for First Time buyers on the Scheme?
Yes.
On the First Home website, you have resources that address the following:
- Homebuyer’s Guide
- Self-Build Guide
- Tenant Home Purchase Guide
- Other FAQS
You can download each one HERE.
Can I become a Participating Lender on the Scheme?
Yes, but you must be a regulated entity authorised to offer mortgage products in the Republic of Ireland.
Is the FHS Scheme regulated?
The First Home Scheme is NOT regulated by the Central Bank of Ireland and the equity product is NOT governed by the Central Bank. However, this does not affect your rights under consumer law.
Can I Use Only the Information that is Available on the FHS website?
Unless you are a financial advisor yourself, it is very strongly recommended that you seek advice from an independent financial adviser and legal adviser if applying for this product.
