First Home Scheme Ireland: Your Easy Guide

Are you a first-time homebuyer in Ireland, feeling a bit overwhelmed by the maze of information surrounding housing schemes? Don't worry; you're not alone. Navigating the world of real estate can be daunting, but fear not - the First Home Scheme is here to make your journey a little smoother.

Our easy guide breaks down the scheme in simple terms, so you can grasp the basics and take your first step towards owning your dream home!

What is the First Home Scheme?

The First Home Scheme is a shared equity scheme sponsored by the Irish government. It’s designed to help individuals or couples purchase their first home.

The government and participating banks pay up to 30% of the cost of your new home in return for a stake in the home. You can buy back the stake at any time, but you don’t have to.

It’s easy to apply, just fill out the online form on the First Home Scheme website.

Property Value Effects The Equity Share

It is important to note that the equity share in your home is a percentage of your home’s market value. So the amount you have to repay will increase if property prices increase.

For example, let’s say you buy a house for €350,000 and the First Home Scheme provides a shared equity of 20% (€70,000). At some point in the future, the property is valued at €400,000 and you want to buy back the equity share. You will then pay €80,000, as this is 20% of the new price.

Who is Eligible?

To qualify for the Irish First Home Scheme, you must meet the following criteria:

• Be over 18 years of age
• Be a first-time buyer or other eligible homebuyer
• Have Mortgage Approval with a Participating Lender
• 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.)

Please note that there aren’t any specific income limits needed in order for you to be eligible for the First Home Scheme.

What Type of Property is Eligible?

To qualify for the Irish First Home Scheme, the property must meet the following criteria:

• Be a qualifying house or apartment OR a Self-build on a privately owned site OR a house or apartment you are currently renting and residing in and now, looking to purchase having received a Notice of Termination from your landlord, as the landlord is putting the property on the market
• Be a property in a private development OR on a site in your name in the Republic of Ireland
• Be your Principal Private Residence
• Be within the local authority property price ceiling for the property type

You can use the First Home Scheme eligibility calculator to find out if you’re eligible.

The Stake Can Be Recouped

As mentioned above, you do not have to pay back the Government’s stake. However, the stake will be recouped in any of the following scenarios:

• If your home is no longer 'principle primary residence' or main home, i.e. if you buy a second home, move out, and want to rent out the home
• If you sell your home, in which case the money will be taken from the sale price
• If you switch your mortgage to a lender which doesn't participate in the First Home Scheme
• When you die, in which case the money will be taken from your estate. The money is only repayable upon the second death for joint applicants

Am I Eligible If I Have A Mortgage Exemption?

You may be offered a mortgage exemption by some lenders, i.e. a mortgage more than four times your income. However, you can’t avail of the First Home Scheme and a mortgage exemption at the same time. You have to choose one or the other.

How Much Will My Mortgage Repayments Be?

For the first 5 years, your mortgage repayments will depend on the mortgage you take out. You won’t be charged extra fees in those 5 years.

However, if in the 6th year you haven’t paid back the total sum of money borrowed from the Government, then you will have to pay an ‘annual service charge’.

This charge is additional to the money you owe the Government. The Government’s stake in your home will not be reduced by the money you pay. The Government's stake will remain payable in future, e.g. upon selling the house, or death.

Instead, the service charge is based on the original amount the Government gave you, less any repayments you have already made. Your service charge won’t increase if the value of your home increases.

How To Pay The Service Charge

The service charge can be paid by electronic funds transfer (EFT), monthly direct debit, or a debit card. You can make 2 instalments or pay in full per year.

If you can’t pay the service charge, you can defer paying until some time in the future, or you can pay a lesser amount.

Deferred payments won’t incur interest or penalties. However, the amount you owe will continue to increase and you will have to repay in full at some point. 

How To Repay The Government’s Equity

You can either make partial repayments or repay all in one go, and you can repay at any time. Partial repayments have to be at least 5% of the original amount lent to you. Over the period of one year, you can make a maximum of two redemption payments.

You also have to mention the source of the funds, e.g. gift, savings, etc. 

Except within the first six months, all redemptions will need an up-to-date property valuation. This is because the market value of the property is linked to the equity share.

Any unpaid service charges have to be paid in full if you’re repaying the shared equity in full.

You Can Also Avail Of The Help To Buy Scheme

You can also avail of the Help To Buy Scheme. For more information, check out our guide here. We outline what the scheme is, who is eligible for it, and how to apply.

However, the maximum amount of equity will be able to borrow from the Government is 20% if you avail of the Help To Buy Scheme.

The Irish First Home Scheme is a valuable resource for first-time buyers in Ireland, offering financial assistance to help make homeownership a reality. By understanding the basics of the scheme and meeting the eligibility criteria, you can take advantage of this opportunity to purchase your first home with greater ease. 

If you're considering buying your first property, be sure to explore the First Home Scheme and see how it can benefit you on your journey to homeownership.

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