First Home Scheme Ireland: Eligibility, Equity Charges, and What It Really Costs Long-Term

Here's the situation the First Home Scheme (FHS) was designed for. You've done everything right — saved your deposit, got approved in principle, borrowed the maximum four times your income. And you're still €40,000 short of the home you need. The FHS hands you that €40,000 in exchange for a percentage of your property. No monthly repayments, no interest. Just the State owning a share of your home.

That sounds simple. It isn't entirely. The long-term cost depends on your property's future value, when you choose to buy out the equity, and whether you understand the service charges that kick in at year six.

What the First Home Scheme Actually Does

The FHS is a shared equity scheme jointly funded by the State and participating commercial lenders — currently AIB, EBS, Haven, Bank of Ireland, and Permanent TSB. Its purpose is to bridge the gap between what you can borrow (your maximum mortgage plus deposit) and the actual purchase price of a new-build home or self-build.

The scheme can contribute up to 30% of the property's purchase price or build cost. If you also use the Help to Buy (HTB) scheme alongside it, the maximum FHS equity share drops to 20%.

The FHS does not give you a loan. It takes a percentage ownership stake in your home — proportional to the equity it contributes. If you receive €40,000 against a €400,000 home, the FHS owns 10% of the property. If that property later rises to €480,000 and you decide to buy out the equity, you pay €48,000 — 10% of the current value, not the original equity amount.

Eligibility: What the Rules Actually Require

The FHS applies to new builds and self-builds only. Second-hand homes are excluded. There is no income cap, which distinguishes it from the Local Authority Home Loan and the Affordable Purchase Scheme.

Instead of an income limit, eligibility is governed by two requirements. First, you must be a first-time buyer, or a "Fresh Start" applicant — someone who previously owned a home but lost their financial interest through divorce, separation, relationship breakdown, bankruptcy, or personal insolvency. Fresh Start applicants are treated as first-time buyers under the scheme.

Second, and this is the critical rule, you must borrow the maximum amount available to you under standard Central Bank lending limits — four times your gross annual income — before the FHS will top up the remainder. You cannot choose to borrow less to keep repayments lower, then ask the FHS to fill the gap. The scheme is specifically designed for buyers who have genuinely exhausted their borrowing capacity. You also cannot use a Central Bank LTI exception (borrowing up to 4.75 times income) simultaneously with the FHS.

Regional property price ceilings also apply. The FHS sets limits on what properties qualify by county, so check the current caps before selecting a home, particularly in Dublin and surrounding commuter counties where prices are highest.

The Service Charges: Why Years 6 Onwards Matter

No monthly repayments are due on the FHS equity for the first five years of ownership. From year six, the scheme levies an annual service charge on the outstanding equity stake to cover its administrative costs:

The service charge is calculated on the original cash amount advanced by the FHS — not on the property's current market value. So if the FHS contributed €40,000, the annual charge from year six is €700 (1.75% of €40,000). That said, the underlying equity stake is still a percentage of whatever the home is worth. The buyout price tracks the market.

The practical implication: buyers who plan to stay in the property long-term should aim to buy out the FHS equity stake before year six to avoid accumulating service charges. You can redeem in full or in part at any time, with a minimum partial redemption of €10,000.

The Buyout Calculation: How Property Inflation Affects You

This is the part that requires the most careful thought. Because the redemption price is calculated as a percentage of the property's current market value at the time of buyout, any price inflation increases your cost.

Worked example: You bought a home for €400,000. The FHS contributed €40,000, representing a 10% equity stake. Five years later, the property is worth €480,000. To buy out the FHS equity at that point, you pay 10% of €480,000 — €48,000. You've paid back €8,000 more than you received, purely due to price growth.

If prices rose significantly faster — say to €520,000 — the buyout rises to €52,000. On the other hand, if prices fell to €360,000, you'd only pay €36,000 to redeem the full stake.

This is why financial planners advise FHS users to set up a separate savings plan specifically to voluntarily redeem the equity stake (in €10,000 increments) as early as possible, ideally before the service charges begin in year six.

How the FHS Compares with the Help to Buy Scheme

HTB is a tax refund — money you already paid to Revenue that comes back to you. It does not involve any ongoing equity share or future cost. The FHS is an equity stake that the State holds in your property until you buy it back.

The two schemes are compatible and are frequently used together. The combination reduces the maximum FHS equity from 30% to 20%, but the combined financial benefit often outweighs this reduction.

A buyer purchasing a €350,000 new-build who receives a €30,000 HTB refund still has a €320,000 effective purchase requirement covered by mortgage plus FHS equity. If their mortgage capacity is €280,000, the FHS can provide the remaining €40,000 — a 12.5% equity stake — well within the 20% cap that applies when combining both schemes.

The FHS is incompatible with the Local Authority Home Loan and with the Local Authority Affordable Purchase Scheme. If you are applying for either of those routes, the FHS is not available to you.

Self-Build Specifics

For self-builders, the FHS applies uniquely to the build cost rather than the site value. If you already own a site, the site's value can contribute toward the 10% deposit requirement. However, the FHS equity stake is calculated as a percentage of the construction cost only — not the combined site plus build value.

This accounting approach also applies at buyout. At the point of redemption, the current value of the site is discounted from the total property valuation before calculating the buyout cost of the FHS equity share. If the site represented 25% of the initial build valuation, that 25% portion is excluded from any future market valuation when calculating the buyout.

Before You Apply

Get mortgage approval in principle from your bank first — the FHS application requires evidence that you've secured the maximum standard mortgage available to you. Then apply directly through the First Home Scheme portal at firsthomescheme.ie. Your solicitor will handle verification on the legal side.

The Ireland First-Time Home Buyer Guide includes detailed worksheets for modelling your FHS equity share, projected buyout costs at different property price scenarios, and a compatibility checklist for all Irish housing schemes — so you can see exactly which combinations are available to you before you start bidding.

See more Ireland guides →