‘Game-changer’ First Home program to bridge the gap for squeezed-mid-size home buyers

Thousands of middle-income homebuyers will benefit from a pioneering affordable housing program.

It aims to bridge the gap for those whose income is too low to take out a mortgage big enough to buy their first home.

First Home’s shared equity program is set to be launched by the government from early July with 400 million euros Irish Independent have learned.

The three main banks have joined the program, which envisages the state providing an interest-free share of up to 30 percent in the house.

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It is expected to cover the purchase of 8,000 new homes over the next four years.

The high-profile measure has been delayed but is now set to go live from the end of the first week of July, Housing Secretary Darragh O’Brien said.

Under the program, the purchase of new housing will be funded jointly by the state and participating mortgage lenders.

AIB, Bank of Ireland and Permanent TSB are involved in the scheme and other lenders are expected to sign up.

The flagship ‘First Homes’ program under the Government’s ‘Housing for All’ strategy will have no income limits on those who apply.

However, there are restrictions on the value of properties that qualify for the program in each local government area. Limits are based on the median for a new home in the area.

The new system is welcomed by the bruised middle caught paying sky-high rent.

These people earn too much to qualify for social housing, but too little
qualify for a mortgage in a real estate market where values ​​are once again approaching the peaks of the Celtic Tiger.

It comes at a time when Mr O’Brien is under sustained pressure as President Michael D. Higgins recently described the country’s housing policy as a “disaster”.

Mr O’Brien said he and his officials worked on the program for two years and received approval for it from the European Union, the European Central Bank and the Central Bank here.

“I think this program has the potential to be a real game changer for this group of people who are unable to buy because of the gap between the funding they have and the funding they need. It will make a difference quickly.”

He said more money than the initial €400 million will likely be put into it.

Non-bank lenders were eager to sign up. Mr O’Brien said the scheme would encourage builders to provide more homes for first-time buyers.

“I’m aiming for 2,000 homes a year under this program over the next three years, and we could do more.”

He dismissed suggestions the program would add to housing market inflation.

“That is 75 million euros per year in a mortgage market of 15 billion euros. It’s a tiny percentage and it’s targeted and calibrated,” Mr O’Brien said.

The First Home program is led by former Home Building Finance Ireland chief executive Michael Broderick.

Typical beneficiaries of the program would be a couple with an income of €70,000 looking to buy a new home for €320,000.

After a deposit of 10 percent, they can borrow a maximum of €277,000. This leaves a gap of €43,000.

First Home would provide this amount as equity, with no interest for the first five years.

This couple could also benefit from government purchase assistance, which typically offers tax breaks of up to 20 percent of a property’s value.

First Home applies to first-time buyers, but also to divorcees and insolvency administrators. ‘Game-changer’ First Home program to bridge the gap for squeezed-mid-size home buyers

Fry Electronics Team

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