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.
The dream of homeownership in Ireland can often seem challenging due to rising property prices and the significant deposit and mortgage requirements. For many, securing a large mortgage is a primary barrier. However, schemes like the First Home Scheme, a shared equity initiative, are designed to assist eligible buyers in purchasing newly built homes, reducing the amount they need to borrow from traditional lenders and making homeownership more accessible.
How shared-equity schemes work
Shared equity schemes, such as the First Home Scheme in Ireland, operate by having the government or a designated fund take an equity share in a new home. This share typically covers a percentage of the property’s purchase price, allowing the buyer to secure a smaller mortgage and reduce their required deposit. For instance, if a property costs €300,000 and the buyer has a mortgage of €240,000 and a deposit of €30,000, a shared equity scheme might contribute the remaining €30,000 (10% equity share). The buyer owns the home, but the scheme retains an equity interest, which is generally repaid over time or when the property is sold. This mechanism aims to bridge the affordability gap, helping individuals purchase homes they might otherwise not be able to afford.
Who qualifies under 2025 rules
Eligibility for the First Home Scheme is subject to specific criteria, which can be updated. As of the general understanding for 2025, the scheme is typically available to first-time buyers and certain other eligible applicants, such as those who have previously owned a home but have since sold it and do not own any other property. Key requirements usually include purchasing a newly built house or apartment within a participating development, and the property must be within the specified price ceilings for the county in which it is located. Applicants must also secure the maximum mortgage available to them from a participating lender, generally 70% of the property’s value, and contribute their own minimum deposit of 10%. The scheme then provides equity support for up to 30% of the property’s value (or 20% if availing of the Help to Buy scheme).
Costs and long-term obligations
The First Home Scheme involves several financial considerations beyond the initial purchase. While it reduces the amount you need to borrow from a traditional lender, there are long-term obligations associated with the equity share. Understanding these financial aspects is key to making an informed decision. The scheme typically takes a percentage share of the property’s value, which must be repaid over time, either through incremental payments or when the property is sold. This equity share repayment can increase if the property value rises, as the scheme’s share is based on the property’s current market value at the time of repayment. Buyers typically have the option to buy out the equity share in tranches over time, often after five years, or repay it in full when the property is sold. Additionally, buyers will face standard purchasing costs, including legal fees, valuation fees, and stamp duty. Ongoing costs such as Local Property Tax and home insurance also need to be factored into a long-term budget.
| Aspect | Description | Estimated Cost/Factor |
|---|---|---|
| Equity Share Repayment | Repayment based on current market value of the share. | Variable, depends on property appreciation |
| Legal Fees (Conveyancing) | Costs for solicitors handling the property transfer. | €2,000 - €5,000 |
| Valuation Fees | Lender-required valuation of the property. | €150 - €300 |
| Stamp Duty | Tax on property purchase, based on property value. | 1% of property value up to €1 million, 2% above |
| Local Property Tax (LPT) | Annual tax based on property value band. | €100 - €1,000+ annually (variable by band) |
| Home Insurance | Mandatory for mortgage holders, covers building and contents. | €300 - €700+ annually |
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.
Documents and steps to apply
The application process for the First Home Scheme typically involves several key steps and required documentation. Initially, applicants usually engage with a participating lender to determine their maximum mortgage capacity and obtain a mortgage approval in principle. Following this, an application to the First Home Scheme can be made, often through an online portal, where details of the property being purchased and personal financial information are submitted. Necessary documents commonly include proof of identity, proof of address, income verification (payslips, employment letters, tax returns), bank statements, and details of any savings or existing loans. The scheme administrators will assess the application against their eligibility criteria and property price ceilings. If approved, an equity approval in principle is issued, which then facilitates the final stages of the property purchase.
Common mistakes buyers should avoid
When navigating shared equity schemes, buyers should be mindful of potential pitfalls. One common mistake is not fully understanding the long-term implications of the equity share, particularly how repayments are calculated based on the property’s future value. It is crucial to read all terms and conditions carefully and seek independent financial and legal advice. Another error can be underestimating all the associated costs of buying a home, beyond just the mortgage and equity contribution. Buyers should budget for legal fees, stamp duty, valuation fees, and ongoing expenses like property tax and insurance. Failing to secure the maximum possible mortgage from a lender can also lead to issues, as this is a core requirement for the scheme. Furthermore, not thoroughly researching the property and development, or not ensuring it meets the scheme’s criteria, can cause delays or even rejection of an application. Being proactive and meticulously prepared can help streamline the process.
Participating in schemes like the First Home Scheme can offer a viable route to homeownership in Ireland for many. By understanding how shared equity works, who qualifies under current rules, the full scope of financial obligations, and the application process, prospective buyers can make informed decisions. Avoiding common mistakes and seeking professional advice are essential steps towards successfully purchasing a home with reduced upfront borrowing.
