Navigating the complexities of income and deposit requirements for obtaining a mortgage, particularly given the high property prices in Ireland, can be challenging for first time buyers. Many individuals renting their homes, with limited disposable income for saving, often find the dream of homeownership seemingly out of reach. However, overcoming these obstacles becomes more achievable when armed with knowledge and by taking advantage of government support schemes.

This article sheds light on two crucial government initiatives - the Help to Buy Scheme and the First Home Scheme - providing insights on how these schemes can be leveraged to fulfil your property ownership goals.

 

Help to Buy Scheme

 

Understanding the Help to Buy Scheme

The Help to Buy (HTB) Scheme is a government-backed incentive introduced to assist first time buyers in accumulating the necessary deposit to acquire a new home, whether it be a house or apartment for primary residence. Under the HTB, applicants can receive a refund or rebate of Income Tax and Deposit Interest Retention Tax (DIRT) paid over the four-year tax period before the application.

The HTB Scheme is available until 31 December 2025. To qualify, you must sign a purchase contract for your home by this date, or, in the case of a self-build, initiate the first drawdown during this period.

 

How much can you get?

The Help to Buy Scheme offers a maximum tax rebate of 10% of the property value, up to €30,000, for first time buyers.

For example, a couple aiming to buy a €400,000 home with only €10,000 in savings can utilise the HTB rebate of €30,000. The rebate, combined with their savings, constitutes the full 10% deposit allowing them to secure a mortgage of €315,000 (which is 90% of the home purchase price).

 

First Home Scheme

 

Unpacking the First Home Scheme

The First Home Scheme (FHS) is a shared equity initiative designed to bridge the affordability gap for first time buyers and eligible homebuyers between their deposit, mortgage, and the property price. Originally launched in July 2022 for new build homes, the FHS has since expanded to include self-builders and individuals looking to buy their rental property as they have received a Notice of Termination because their landlord plans to sell the property.

 

How much can you get?

Under the FHS, the government and participating lenders contribute from 2.5% to 30% of the new home's cost in return for an equity share in the property. With no income limits, the FHS assists those with conservative incomes in overcoming funding gaps and realising homeownership.

For instance, a couple with a joint annual income of €70,000 and who have managed to save a €40,000 deposit can, with the FHS, purchase a €400,000 home - even if they cannot secure a sufficient mortgage. The couple is able to secure a mortgage amount of €280,000 (i.e., four times their joint annual income), which means that when their deposit and mortgage is combined, there is a shortfall of €80,000. The FHS will cover this shortfall, enabling them to afford to buy their home.

 

Combining the Help to Buy Scheme and First Home Scheme

Depending on the additional funding needed, leveraging both schemes can help you fund your home purchase. Where you rely on both the HTB and FHS, you will still be eligible for the full Help to Buy rebate. However, you will be limited to receiving up to 20% from the FHS.

For example, a couple with a joint annual income of €70,000 and €10,000 savings aiming to purchase a €400,000 home can apply for both schemes. The HTB rebate covers €30,000, adding to their savings for the full €40,000 deposit. As they can only secure a €280,000 mortgage, the shortfall between their deposit and mortgage (€320,000), and the price of their home (€400,000) will be €80,000. They can leverage FHS support to cover this shortfall, and buy their home.

 

The Help to Buy Scheme and First Home Scheme play vital roles in supporting first time buyers in achieving homeownership. Visit our website for comprehensive guides on both schemes, and contact us for advice tailored to your needs and aims.