Searching for First Home Fund Scotland can bring up two schemes. The old First Home Fund closed in March 2022. The current First Homes Fund offers eligible buyers up to £10,000 towards a Scottish home.
In return, the Scottish Government takes an equity stake: a financial share in your home’s value. You still need your own deposit and a suitable mortgage, so compare the fund with other first-time buyer schemes before deciding.
How Scotland’s First Homes Fund works
SUPPORT
A contribution towards your purchase
Shared equity helps bridge the gap in your purchase funding.
HOMES
New and existing Scottish homes
You can buy a qualifying new build or existing property.
MORTGAGE
Your mortgage remains a separate commitment
You repay your lender under your mortgage terms.
EQUITY
Repayment follows your home’s value
You repay the government’s share when selling or buying it out.
Who can apply for the fund?
The fund supports homes up to £300,000. Before applying, check these requirements:
First-time buyer status
At least one applicant must never have owned a home anywhere in the world, including jointly.
Buying with someone else
Joint buyers receive one award per property. If your co-buyer owns another home, they must sell it before completion.
A home to live in
The property must be your main and only home in Scotland and meet the required housing standard. Rental investments and cash purchases do not qualify. The Home Report describes the property’s condition and value, helping you identify possible repair costs.
Your deposit, mortgage and purchase costs
You typically need your own deposit of around 5%, subject to lender rules. You need a repayment mortgage, so your payments cover both the loan and interest. The mortgage must cover at least 25% of the purchase price or valuation, whichever is lower. The valuation is an assessment of the home’s market worth.
Illustrative example: the price and valuation are both £200,000.
Funding source
Amount
Your own deposit
£10,000
First Homes Fund contribution
£10,000
Mortgage required
£180,000
Total purchase price
£200,000
This example is not a mortgage offer. Here, the government holds a 5% stake. Although you make no monthly payments on that share, your lender still checks affordability, credit and the property. It must also accept shared equity funding.
Budget separately for legal fees, any Land and Buildings Transaction Tax (LBTT) due and ongoing ownership costs. You also need extra cash for any amount paid above valuation.
Repaying the government’s share of your home
The equity stake carries no interest or monthly instalments. However, the amount you repay can rise or fall with your home’s value.
Using the same 5% stake, repayment would be £12,000 if the later sale price and market valuation were both £240,000. If both were £180,000, you would repay £9,000. Your mortgage balance and selling costs are separate.
On a sale, the government uses the sale price or current value, whichever is higher. Therefore, the original £10,000 is not a repayment ceiling. Contact the agent before selling.
Alternatively, you can arrange an earlier buyout based on a fresh valuation, with costs to pay. The equity repayment guidance explains these rules. Existing owners under the old fund should follow their own legal agreement.
How to apply for the fund
- First, discuss your mortgage and obtain an Agreement in Principle (AIP). Have an offer accepted or reserve a new build, and appoint a solicitor. An AIP is not a mortgage offer.
- Next, apply through Link Group before concluding missives, the binding Scottish purchase contract. Supply mortgage and income evidence, plus the Home Report for an open-market purchase.
- After an award, conclude missives within three months, then complete the purchase within six months of that.
Link’s assessment checks that mortgage and other debt repayments do not exceed 45% of net disposable income.
The £650 application fee is due after the award and cannot come from the fund contribution. Pay it at least three weeks before completion to avoid holding up the funds. Link refunds the fee if the purchase falls through, unless you supplied false or misleading information or committed fraud. Check availability before relying on funding.
How Muttuo can help
Muttuo can review your mortgage options. The administrator confirms eligibility and funding, while your solicitor explains the legal terms.
Review your deposit and funding
Check shared equity lender requirements
Understand likely mortgage costs
Plan your first purchase in Scotland
Talk through your Scottish first-home budget and next steps.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Common First Homes Fund questions
Can I use a Lifetime ISA?
Yes, you can use Lifetime ISA savings towards your deposit, provided you meet the ISA’s own rules. However, you cannot combine the fund with another Scottish Government shared equity scheme.
Is this the same as First Homes in England?
No. England’s First Homes scheme offers eligible buyers a discounted purchase price. Scotland’s First Homes Fund instead takes an equity stake, with its own eligibility and repayment rules.
