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.
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.
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. The application must be made before the legal process is too far advanced.
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 your sole or main residence. 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 sole residence;
- the property value is within the current limit;
- you are taking a capital repayment mortgage;
- you have the required deposit and funds for costs;
- your application passes the scheme and lender checks.
If buying jointly, at least one applicant must be a first-time buyer. If another applicant currently owns a property, that property must be sold before the new purchase completes.
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
Your own savings, gifted deposit or eligible ISA savings may form part of the purchase structure. The exact deposit depends on the lender, product, credit profile and property.
Mortgage
The main mortgage should usually be on a capital repayment basis. 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%
If the property is later sold for £270,000, the Government share is based on the percentage, not a fixed £10,000.
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 shared equity repayment, property value changes, selling the property, staircasing, 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.
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. 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 the current value limit and residence requirements. It must be your main home, not a buy-to-let or second home. It also needs to be acceptable to the mortgage lender.
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 £10,000 is the initial contribution, but the Government’s interest is normally recorded as a percentage share. If the property increases in value, the cash amount repayable can be higher. If the value falls, the amount may be lower.
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?
Potentially yes. Joint applications can work, but the first-time buyer rules and ownership history must be checked carefully. If one applicant already owns or previously owned a property, this can affect eligibility.
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 before missives are concluded. Timing matters because applying too late can create serious problems. 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.