TL;DR
Scottish First Homes Fund — key points
The Scottish First Homes Fund is a Scottish Government shared equity scheme for eligible first-time buyers in Scotland. It can provide up to £10,000 toward a property valued up to £300,000, subject to the scheme rules and funding availability.
The support can help reduce the mortgage amount needed, but it does not replace the normal mortgage process. You still need a suitable repayment mortgage, your own deposit, lender approval, legal work and a clear plan for purchase costs.
Because the Government contribution is a percentage equity share, the repayment amount can move with the value of the property. If the property increases in value, the cash amount repayable may be higher than the original contribution. You must apply before missives are concluded, when the purchase contract becomes legally binding in Scotland.
What is the Scottish First Homes Fund?
The Scottish First Homes Fund is a shared equity scheme for first-time buyers who want to buy a home in Scotland but need extra support with the funding structure.
It is not a grant and it is not a normal loan with monthly repayments. The Scottish Government contributes toward the purchase and takes a percentage stake in the property based on the amount it contributes.
You remain responsible for the mortgage, insurance, repairs, council tax, utilities and maintenance. The Government share is normally repaid when you sell the home, or earlier if you choose to buy out part or all of that share.
How does shared equity work?
Shared equity means that you own the property, but the Scottish Government holds a financial share in it. That share is calculated as a percentage, not as a fixed amount forever.
Broker tip
Many buyers assume the £10,000 replaces their deposit. That is usually not how the scheme works. You normally still need your own deposit, and the lender must be comfortable with the full mortgage application.
The key difference between shared equity and shared ownership is ownership. With shared equity, you own the home outright, subject to the mortgage and the Scottish Government security. With shared ownership, another organisation owns part of the property and may charge rent on its share. Compare other Scottish options in our guides to Shared Ownership in Scotland, LIFT and the Open Market Shared Equity scheme.
How the First Homes Fund process works
Check eligibility and budget
Review income, deposit, credit position, purchase costs and likely borrowing capacity before viewing homes.
Get an Agreement in Principle
You will need a capital repayment mortgage and a lender willing to consider the full case.
Find a property in Scotland
The property must fit the scheme rules, including the price or valuation limit.
Make an offer or reserve a new build
The scheme application usually follows an accepted offer or new-build reservation.
Apply before missives are concluded
Timing matters. You must apply before your solicitor concludes missives, the exchange of formal letters that makes the purchase contract legally binding in Scotland. Once missives are concluded, you can no longer apply for that purchase.
Complete mortgage and legal work
Your solicitor, lender and scheme administrator need to align the mortgage offer, shared equity documents and completion funds.
Move in
The property must be the main and only home of all applicants. It cannot be used as a buy-to-let investment or second home.
Who can apply?
The scheme is aimed at first-time buyers buying in Scotland. A first-time buyer is someone who does not own, and has not previously owned, a property in Scotland, elsewhere in the UK or anywhere else in the world.
- you are buying your first home in Scotland;
- the property will be your main and only home;
- the property value is within the current limit;
- you are taking a capital repayment mortgage;
- you have the required deposit and funds for costs;
- you do not have an open application to another Scottish Government shared equity scheme (it must be withdrawn first);
- the property meets the Tolerable Standard, the basic legal housing condition in Scotland;
- your application passes the scheme and lender checks.
If buying jointly, at least one applicant must be a first-time buyer, and a joint application receives one award of up to £10,000, not one per person. If another applicant currently owns a property, it must be sold before the new purchase completes. Builder incentives and assisted purchase can be used, but part exchange cannot.
Property price limit
The current property limit is £300,000. The scheme can be used for properties in Scotland up to that value, subject to detailed rules.
Important valuation point
Paying above the home report valuation can create a higher cash requirement and may increase negative equity risk. This should be checked carefully before you commit to the purchase.
Deposit, mortgage and lender requirements
The First Homes Fund contribution can reduce the mortgage amount you need, but it does not automatically replace your own deposit. Buyers still need a mortgage application that works for the lender, the property and the shared equity rules.
Deposit
Official guidance says buyers typically need a deposit of around 5% on top of the First Homes Fund contribution. It can come from your own savings, a gifted deposit, or a Help to Buy ISA or Lifetime ISA. The exact deposit depends on the lender, product, credit profile and property.
Mortgage
The main mortgage must be a capital repayment mortgage (not interest-only) covering at least 25% of the purchase price, or of the valuation if that is lower. Cash purchases cannot use the scheme. The lender still checks affordability, income evidence, commitments, credit history and property details.
Lenders
The public lender list can change. Check official guidance and confirm lender availability at application stage, because the lender, solicitor and scheme administrator all need to align on the same purchase.
Self-employed, buying with a partner and gifted deposit
Self-employed buyers may need tax calculations, accounts or bank statements. Buying with a partner can change eligibility and affordability. Gifted deposits may be accepted by some lenders, but the source, documentation and family relationship should be checked before relying on the funds.
Example purchase
- Property price
- £240,000
- Buyer deposit
- £12,000
- First Homes Fund contribution
- £10,000
- Mortgage required
- £218,000
- Government equity share
- approx. 4.17%
Illustration only, assuming the valuation equals the £240,000 price. If the property is later sold for £270,000, about 4.17% of the sale price or current value, whichever is higher (roughly £11,250), would be repayable, not a fixed £10,000. At £220,000 it would be roughly £9,167.
Advantages and things to consider
Shared equity can be useful, but it adds legal and financial conditions. You should understand both the upside and the obligations before applying.
Possible advantages
The contribution can reduce the mortgage amount needed, there is usually no monthly Government payment, and the scheme is targeted at helping eligible first-time buyers in Scotland.
Things to check first
Check how the shared equity is repaid, how property value changes affect it, the rules on selling, buying back part (in steps of at least 5%) or all of the Government share early, lender restrictions and future remortgage options before you commit.
Before you apply
Do not treat the scheme contribution as automatic affordability. The mortgage still needs to be affordable and the property still needs to be acceptable to the lender. Budget too for solicitor fees, any lender fees and Land and Buildings Transaction Tax (LBTT, Scotland's equivalent of Stamp Duty), checking whether first-time buyer relief applies on Revenue Scotland.
How Extend Finance can help
If you are considering buying your first home in Scotland, Extend Finance can check whether the First Homes Fund may fit your situation, compare participating lenders and guide you from Agreement in Principle to completion.
Official resources
Check the latest official information before applying: mygov.scot First Homes Fund, Scottish Government First Homes Fund policy and First Homes Fund: how to apply.
FAQ
Frequently asked questions
Is the Scottish First Homes Fund a grant?
No. It is a shared equity contribution, not a grant and not a normal monthly loan. The Scottish Government takes a percentage share in the property based on the amount it contributes. You normally repay that percentage when you sell the home or if you choose to buy out the Government share earlier.
How much support can I get?
The scheme can provide up to £10,000, subject to eligibility, property limits and funding availability. The amount is converted into a percentage share of the property. Always check the latest official Scottish Government guidance before relying on the figure.
Do I still need a mortgage?
Yes. You still need a suitable capital repayment mortgage from a lender that can support the purchase structure. The lender will assess your income, credit history, affordability, deposit and the property. The First Homes Fund can help with the funding stack, but it does not replace lender underwriting.
Do I still need a deposit?
Usually yes. The Government contribution does not normally replace your own deposit. Official guidance says buyers typically need around 5%, but the exact deposit depends on the lender, product, property value and your personal circumstances.
Can I use the scheme for any property in Scotland?
No. The property must meet the scheme rules, including a Home Report value of no more than £300,000, and be the sole residence of all applicants. It cannot be a buy-to-let or second home, and the mortgage lender must also accept the property. A purchase price above the valuation can require extra funds from you.
What is shared equity?
Shared equity means you own the property, but the Scottish Government holds a financial percentage share in it. You do not make monthly payments to the Government share, but it must be repaid later. If the property value changes, the amount due back can also change.
Does the Government share stay fixed at £10,000?
No. The contribution is up to £10,000, and the amount actually advanced is recorded as a percentage of the property’s value under the agreement. When that stake is repaid, the cash amount can be higher if the home has increased in value or lower if it has fallen. It is not a fixed £10,000 debt.
Can self-employed buyers apply?
Potentially yes. Self-employed buyers may need extra income evidence such as tax calculations, tax year overviews, accounts or business bank statements. The scheme may be available, but the mortgage lender must still accept the income and overall affordability.
Can I buy with a partner?
Yes, if at least one of you is a first-time buyer. A joint application receives one award of up to £10,000, not one per person. If one of you currently owns a property, it must be sold before your purchase completes. The lender will assess affordability for both applicants.
Can I use a gifted deposit?
Possibly. Gifted deposits are usually lender-dependent and must be properly documented. The lender and solicitor will normally want to confirm who is giving the money, whether it is a gift or loan, and whether the donor will have any interest in the property.
When should I apply?
You normally apply after your offer has been accepted or after reserving a new-build property, but always before missives are concluded, when the purchase contract becomes legally binding in Scotland. Once missives are concluded, you can no longer apply for that purchase. A broker and solicitor can help coordinate the mortgage and scheme application stages.
Can Extend Finance guarantee approval?
No. No broker can guarantee approval from the lender or scheme administrator. Extend Finance can help check your circumstances, compare suitable lender options and guide the mortgage process, but final decisions sit with the lender and scheme administrator.
Where can I check the latest rules?
Use the official mygov.scot and Scottish Government pages before applying. Scheme rules, funding availability and lender participation can change. You should also take personalised mortgage advice before making decisions based on a general guide.