Discover how the First Home Scheme, a cornerstone of Ireland’s “Housing for All” strategy, is making homeownership in Donegal more accessible. This comprehensive guide explores the scheme’s eligibility criteria, financial benefits, and application process, offering a pathway for first-time buyers and self-builders to achieve their dream of owning a home. With detailed insights into the scheme’s shared equity model, property types, and price ceilings, potential homeowners in Donegal will find valuable information to navigate the complexities of the housing market.

The Irish Government’s “Housing for All” strategy represents a comprehensive effort to tackle the housing crisis facing the nation. With an ambitious agenda to deliver homes across Ireland, the initiative addresses various facets of the housing market, from affordability and supply to sustainability and community development. Central to this strategy is the First Home Scheme (FHS), a groundbreaking program aimed at making homeownership more attainable for first-time buyers and self-builders who find themselves edged out of the market due to financial constraints.

The significance of the FHS for Donegal cannot be overstated. A county known for its stunning landscapes and vibrant communities, Donegal faces unique challenges in housing affordability and availability. The scheme presents a beacon of hope for residents of Donegal, offering a tangible pathway to homeownership in a market that has become increasingly inaccessible for many.

What is the First Home Scheme (FHS)?

The First Home Scheme emerges as a shared equity scheme, ingeniously crafted to bridge the gap for first-time buyers and eligible self-builders between the price of a new home and their financial reach. Through the scheme, participants receive financial assistance towards the purchase of a newly built home, in return for which the government acquires a percentage ownership in the property. This innovative approach allows buyers to secure a home with a smaller initial outlay than would otherwise be possible, significantly lowering the barriers to entry for homeownership.

The scheme is distinguished by its shared equity model, which differs fundamentally from traditional mortgage loans. Instead of taking on additional debt, participants share a portion of their home’s equity with the government. This equity share represents the government’s stake in the property, proportional to the financial assistance provided through the scheme. For the homeowner, this means no interest is paid on the equity share for the first five years, with a modest service charge applied from the sixth year onwards. This arrangement not only eases the financial burden on new homeowners but also aligns the government’s interest with the homeowner’s, in ensuring the stability and growth of the housing market.

In essence, the First Home Scheme stands as a cornerstone of the “Housing for All” strategy, embodying the government’s commitment to facilitating homeownership and addressing the housing affordability crisis. For Donegal, with its distinct market dynamics and housing needs, the FHS opens up new opportunities for individuals and families dreaming of owning their home, contributing to the broader goal of building sustainable and thriving communities across Ireland.

Eligibility Criteria

The First Home Scheme (FHS) delineates specific eligibility criteria to ensure the program reaches its intended audience: those most in need of financial assistance to own their first home.

  • Age and Status: Applicants must be over 18 years of age and considered first-time buyers. A first-time buyer is defined as someone who has not previously purchased or built a dwelling in the Republic of Ireland for their occupation. This criterion is designed to ensure that the support provided by the FHS reaches individuals and families who have not had the opportunity to own a home previously.
  • Residency Rights: Applicants must have the right to reside in Ireland, ensuring that the scheme benefits residents committed to living and contributing to the local economy and community.
  • Special Conditions: The scheme also accommodates individuals under special conditions such as those who have gone through a relationship dissolution or insolvency proceedings. For instance, if an applicant has previously purchased a property with a spouse, civil partner, or cohabitant and the relationship has ended, they may still be eligible if they no longer retain an interest in the previous property. Similarly, individuals who have had to sell or divest a property due to insolvency proceedings are not disqualified from applying.
  • Mortgage Approval and Financial Limits: Eligibility extends to those who have received mortgage approval from a participating lender. Applicants must borrow the maximum mortgage amount available to them (up to 3.5 times their income) and have a minimum deposit of 10% of the property purchase price. This requirement underscores the importance of the applicants being financially prepared to take on the commitment of homeownership, with the FHS designed to supplement, not replace, traditional mortgage lending.

Financial Aspects and Benefits

  • Financial Support Structure: The FHS can fund up to 30% of the purchase price of a new property if the Help to Buy Scheme is not being used, and up to 20% if it is. This substantial financial support significantly reduces the initial financial barrier to homeownership, making it feasible for many who would otherwise be unable to afford a home.
  • Service Charges: From the sixth year of ownership, a modest service charge is applied to the equity share provided by the FHS. This charge starts at 0% for the first five years to ease the homeowner into their new financial responsibilities. The rate then increases incrementally, reflecting the shared equity nature of the scheme rather than traditional loan interest. This gradual introduction of service charges helps homeowners adjust financially over time.
  • Redemption Flexibility: One of the most appealing aspects of the FHS is the flexibility it offers in terms of equity share redemption. Homeowners can choose to redeem the government’s equity share in their property at any time, either partially or in full. This means that as a homeowner’s financial situation improves, they have the opportunity to increase their ownership stake in the property, eventually owning it outright. This flexibility allows for significant financial planning and adjustment over time, making the FHS a versatile and supportive tool for first-time homeowners.

The eligibility criteria and financial aspects of the FHS underscore the program’s role as a supportive pathway to homeownership for individuals and families in Donegal and across Ireland. By addressing key financial barriers and providing flexible support, the scheme not only facilitates access to the housing market but also contributes to the long-term sustainability of homeownership.

Property Types and Price Ceilings

Overview of Eligible Property Types under the FHS

The First Home Scheme (FHS) targets the facilitation of homeownership through the acquisition of newly built properties. Eligible property types under this scheme include houses or apartments located within private developments across the Republic of Ireland. This focus on new builds is part of a broader strategy to increase the supply of modern, energy-efficient homes that meet current living standards and sustainability criteria.

Local Authority Area Price Ceilings and Implications for Donegal

Local authority area price ceilings are a critical component of the FHS, setting the maximum property price eligible for the scheme within specific regions. These ceilings are determined based on the housing market dynamics of each area, including Donegal, and aim to ensure the scheme’s accessibility to a wide range of applicants while also reflecting local market conditions. For Donegal, the price ceiling is tailored to the county’s unique housing market, making the scheme relevant and attainable for potential homeowners in the area.

Role of Property Price Ceilings in Scheme Eligibility and Financial Assistance Levels

Property price ceilings directly influence scheme eligibility and the level of financial assistance an applicant can receive. By capping the price of eligible properties, the FHS ensures that the support provided is aligned with local housing markets and is effectively targeted towards those in need. This mechanism also helps prevent inflationary pressures on property prices that could arise from an influx of scheme-supported buyers into the market.

Application Process

Step-by-Step Guide to the FHS Application Process

  • Eligibility Assessment: Applicants begin by assessing their eligibility through the FHS website, considering factors like age, first-time buyer status, and residency rights.
  • Mortgage Approval: Securing a Mortgage Approval in Principle (AIP) from a participating lender is the next critical step. This indicates the amount the lender is willing to offer, based on the applicant’s financial situation.
  • FHS Application: With an AIP in hand, applicants can formally apply for the FHS, submitting the required documentation through the scheme’s online portal.

Required Documentation and Significance of the Eligibility Certificate

Applicants must provide comprehensive documentation, including ID, proof of income, and details of their mortgage approval. Upon reviewing the application, the FHS issues an Eligibility Certificate, indicating the provisional amount of support the applicant is eligible for, which is crucial for the next steps in securing financing.

Final Stages: Customer Contract and Property Purchase

Once the mortgage and FHS supports are approved, applicants receive a Customer Contract from the FHS, formalizing the equity share agreement. The purchase can then proceed, with the scheme contributing its share directly to the purchase transaction, facilitating the completion of the home purchase.

Making Changes and Redemption Options

Overview of Permissible Changes During and After the Application Process

Applicants may need to update their application details or property specifications due to various circumstances. The FHS allows for certain amendments to be made, ensuring the process remains flexible to applicant needs.

Redeeming the Equity Share: Options and Process

The FHS offers significant flexibility in managing the government-held equity share:

  • Partial Redemption: Homeowners can choose to buy back part of the equity share at any time, reducing the government’s stake in their property.
  • Full Redemption: Alternatively, homeowners can fully redeem the equity share, assuming full ownership of the property.
  • Property Valuation’s Role: Redemption amounts are based on the current market value of the property, requiring up-to-date valuations to determine the cost of buying back equity shares.

These components of the FHS ensure that applicants and participants are well-supported throughout their journey to homeownership, with clear pathways to acquiring and eventually owning their home outright.

Final Thoughts

The First Home Scheme represents a significant step forward in the Irish Government’s “Housing for All” strategy, particularly for the residents of Donegal. By providing a shared equity option, the scheme opens the door to homeownership for many who previously found the market out of reach. It’s an initiative that not only supports individuals and families in acquiring their first home but also contributes to the broader goal of developing sustainable and thriving communities across Ireland.

For potential applicants in Donegal, the scheme offers a unique opportunity to make the dream of owning a home a reality, with financial assistance tailored to the challenges of the current housing market. As you consider this path, it’s essential to carefully review the eligibility requirements, financial implications, and application process outlined in this guide.


Please note that the content of this blog post is intended for general information purposes only and should not be construed as legal advice on any specific matter. The information provided is based on the understanding of legal principles and practices as of its date of publication and may not reflect current legal developments. Every legal situation is unique and complex, and readers are advised to seek professional legal advice for any specific legal issues they encounter. McElhinney & Associates Solicitors disclaim all liability for any actions taken or not taken based on any contents of this post.

About the Author

Jolene McElhinney, BBLS, Principal Solicitor

Jolene McElhinney is the founding principal of McElhinney & Associates, a law firm renowned for its expertise in personal injury and medical negligence across the North West of Ireland. With a distinguished academic background, including a first-class honours degree from University College Dublin and awards for excellence in law, Jolene has dedicated over a decade to championing the rights of individuals facing complex legal challenges. Her commitment to professional growth ensures that her firm remains at the forefront of legal practice, offering personalised, expert support to every client.