Buying a Home in Ireland Without a Big Mortgage: How the First Home Scheme and Shared Equity Work in 2025
For Irish buyers struggling with large deposits, the First Home Scheme and shared-equity models offer new pathways into homeownership in 2025. These schemes reduce upfront costs but involve long-term obligations and equity stakes. This guide breaks down how they work, who qualifies, financial implications, and key considerations before applying.
Buying a home without stretching your mortgage can feel out of reach, but Ireland’s shared-equity approach offers a practical alternative. In 2025, the First Home Scheme (FHS) continues to help eligible buyers purchase new-build homes by taking a minority equity share instead of additional debt. Understanding how the equity works, who qualifies, and the long-term costs will help you make a decision that stands up over time.
How do shared-equity schemes work?
Shared equity means the State (through the FHS) takes a percentage stake in your property—typically between 2.5% and 30% of the purchase price. If you also use the Help to Buy (HTB) income tax refund, the shared-equity limit is usually lower (commonly up to 20%). There are no monthly repayments on the equity itself. Instead, from year six, a yearly service charge applies to the amount of equity outstanding. You can “staircase” (buy back) the equity in stages or in full, usually after independent valuations, and you repay the same percentage of the property’s current market value at the time you redeem.
A simple example: on a €400,000 new home with a 20% equity share (€80,000), you take a smaller mortgage and pay the equity service charge only from year six. If you later redeem 10% of the property when values have increased, your payment is based on that 10% of the then-current market value.
Who qualifies under 2025 rules?
Eligibility focuses on buyers who can afford mortgage repayments but cannot bridge the full purchase price of a new-build home. Typical criteria include: - First-time buyers or certain “fresh start” applicants (for example, following separation or insolvency, where no property is owned). - Purchasing a new-build home from a private developer within the relevant local authority price cap for the area. - A minimum deposit (often 10%) and a mortgage with a participating lender, subject to Central Bank lending rules. - Demonstrable shortfall between your maximum mortgage plus deposit and the property price, which the equity stake will cover.
Applicants must intend to live in the property as their primary residence and meet standard underwriting checks. Local price caps and specific documentation requirements can vary, so it’s important to verify details for your local authority.
Costs and long-term obligations
Shared equity is not free money. Key costs to expect include: - Equity service charge: commonly 0% for years 1–5, then a tiered annual rate from year 6 onward (for example, around 1.75% in years 6–15, 2.15% in years 16–29, and 2.85% from year 30). This applies to the outstanding equity amount and can change over time. - Valuation and legal fees: independent valuations are typically required when redeeming equity; buyers also pay solicitor’s fees and standard conveyancing costs. - Standard purchase costs: stamp duty (generally 1% on the first €1 million of residential property), survey or snagging costs, mortgage protection, and home insurance. - Ongoing obligations: keep the property as your principal residence, maintain suitable insurance, and follow scheme rules when selling, switching mortgage provider, or changing ownership.
Because the equity is a percentage, the amount you repay changes with the home’s market value at redemption. If values rise, the cash cost to buy back the same percentage rises too. Building a plan for gradual staircasing can help manage this risk.
Documents and steps to apply
Organise your paperwork early. A typical sequence looks like this: 1. Work out your budget and confirm your deposit. 2. Secure mortgage approval in principle (AIP) from a participating lender. 3. Confirm the relevant local authority price cap and search for eligible new-builds (developers often flag eligibility on listings). 4. Assemble documents: AIP letter, ID and address verification, recent payslips and P60/Employment Details Summary, bank statements, proof of deposit, and property details/reservation form. 5. Apply through the First Home Scheme portal for an Eligibility Certificate showing the equity amount you can access. 6. Once you have a signed property reservation, proceed to a formal offer from the scheme and your mortgage loan offer. 7. Your solicitor reviews the scheme’s customer contract and the mortgage documentation, then you move to drawdown and close.
Local services such as mortgage brokers, chartered valuers, and solicitors in your area can help you check figures, timings, and legal obligations before you commit.
Common mistakes buyers should avoid
- Ignoring the service charge: it may be modest at first, but it adds to ownership costs from year six.
- Overlooking future valuations: staircasing or selling involves valuations; budget for fees and timing.
- Assuming all homes qualify: second-hand properties generally don’t qualify; check price caps and developer eligibility.
- Not coordinating HTB and FHS: using HTB can reduce the maximum shared-equity percentage available.
- Underestimating market value risk: if prices climb, buying back equity becomes more expensive in euro terms.
- Switching lenders without checking rules: moving to a non-participating lender can trigger conditions requiring equity redemption.
To put likely costs into context, the table below compares common supports and how they affect the cash you need and your ongoing costs.
| Product/Service | Provider | Cost Estimation |
|---|---|---|
| First Home Scheme (shared equity) | Government with participating lenders | Equity share typically 2.5%–30% (up to ~20% if combined with HTB). Example: €400,000 home with 20% equity (€80,000); annual service charge from year 6 (e.g., ~€1,400/year at 1.75% if €80,000 remains outstanding). |
| Local Authority Affordable Purchase | Local Authority | Upfront discount in exchange for an equity share in the home. No monthly repayment on the equity; buy back the authority’s share on sale or via staged redemptions. Discount/equity percentages and caps vary by area. |
| Help to Buy (tax refund) | Revenue Commissioners | Refund of income tax and DIRT paid over the previous four years, up to the lower of 10% of the purchase price or a monetary cap (e.g., up to €30,000). Reduces cash deposit needed; if used with FHS, the FHS maximum equity is generally lower. |
Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.
In practice, most buyers combine a standard mortgage, their savings, and one or more of the above supports. Even modest changes in property value, mortgage rates, or the timing of staircasing can shift outcomes, so run multiple scenarios.
Conclusion The First Home Scheme and related shared-equity supports can reduce the size of the mortgage you need for a new-build home while keeping monthly repayments manageable in the early years. The trade-off is a long-term equity partner and a service charge from year six, with repayment tied to future market value. By confirming eligibility, mapping the full cost profile, and planning staged redemptions, buyers can use shared equity to bridge today’s affordability gap while remaining prepared for tomorrow’s obligations.
