First Homes Fund Scotland: how to get £10,000 towards your first home

Greenshoots Financial
1 day ago
6 min read

Getting a foot on the property ladder in Scotland has never felt easy. Prices keep climbing, deposits feel out of reach, and every scheme seems to come with a catalogue of small print.

The First Homes Fund is one of the few genuinely useful bits of help going. If you're buying your first home in Scotland, it could put up to £10,000 towards the cost, no monthly repayments, no interest.

This guide answers the questions I get asked most often as a mortgage adviser: what the First Homes Fund actually is, who can use it, what it costs you down the line, and how to apply without tripping yourself up.

What is the First Homes Fund?

The First Homes Fund is a Scottish Government scheme that helps first-time buyers purchase a home worth up to £300,000. In return for its contribution of up to £10,000, the Government takes a small equity stake in your property rather than charging you interest or asking for monthly payments.

You still own your home outright. You're responsible for all the usual things: maintenance, insurance, repairs, and running costs. The Government's stake simply sits there until you sell, increase your share, or pay it off another way.

It's run on behalf of Scottish Ministers by an administering agent, Link, and you apply online before your solicitor concludes missives on the property.

How does the First Homes Fund actually work?

Here's the bit that trips people up: the £10,000 isn't a flat grant you pay back at face value. It's an equity stake.

Say a property is valued at £100,000 and the Government puts in £10,000. That's a 10% stake in your home, not a £10,000 debt. When you eventually sell, the Government gets 10% of whatever your home sells for. If your home has gone up in value, their slice goes up with it. If it's dropped, their slice drops too.

There's no interest charged and nothing to pay monthly. You can pay off the stake gradually in chunks of 5% or more ("staircasing"), or settle it in one go when you sell.

Who can apply for the First Homes Fund?

You can apply if you:

Have never owned a home anywhere in the world, on your own or jointly with someone else
Can get a capital repayment mortgage covering at least 25% of the purchase price or valuation, whichever is lower
Are buying the property as your main and only home, in Scotland
Your mortgage payments will not exceed 45% of your net income - the scheme requires evidence of this when you apply

If you're buying with a partner or friend, at least one of you needs to be a genuine first-time buyer. If the other person already owns a home, they'll need to sell it before your purchase completes. One thing worth knowing: a joint application gets one £10,000 award between you, not one each.

You can also put a Help to Buy ISA or Lifetime ISA towards your deposit alongside the First Homes Fund.

Who can't apply?

A few situations rule the scheme out:

Buying with cash, with no mortgage involved
Having owned a home before, anywhere in the world, on your own or jointly
Buying a property to let out
Having an open application with another Scottish Government shared equity scheme (you'd need to withdraw it first)
Using part exchange (builder incentives and assisted purchase schemes are still fine)
Planning to rent the property out after you move in - the scheme requires the home to be your only residence

How much deposit do you actually need?

You'll typically need a deposit of around 5% on top of your mortgage and the Government's contribution. Your mortgage needs to be a capital repayment mortgage covering at least 25% of the purchase price or valuation, whichever is the smaller figure.

A handful of lenders currently offer mortgages through the scheme - speak to us about which lender suits you.

How do you apply for the First Homes Fund? Step by step

Speak to a mortgage adviser first. Check the scheme actually suits your situation and that you can get a mortgage to go with it.
Find a property up to £300,000 and get your offer accepted, or reserve a new build plot. A verbal acceptance is enough to start your application.
Appoint a solicitor.
Apply online through the First Homes Fund website before your solicitor concludes missives. You, or your adviser on your behalf, will need your solicitor's details, a mortgage decision in principle, evidence that your mortgage payments won't exceed 45% of your net income - typically payslips or, if you're self-employed, an SA302, and a Home Report for an existing property or a Reservation Agreement for a new build.
Wait for your Award Letter. Once approved, you've got three months to conclude missives and a further six months from there to complete. Miss the three-month window and you'll need to start the application again.
Pay the £650 application fee, due at least three weeks before settlement. It's refunded in full if the sale doesn't go ahead, as long as you haven't given false or misleading information.
Let your solicitor take it from there. The funds are released to them alongside your mortgage on completion.

What does it cost you in the long run?

There's no interest and no monthly bill, but the scheme isn't free money. Here's what to factor in:

The £650 application fee
Your share of the property's growth in value goes down by however much the Government's stake is worth
If your home rises sharply in value, paying off that 10% stake later could cost more in cash terms than the £10,000 you received, because you're repaying a percentage of current value, not the original sum

If you want to clear the stake early, you can do it in increments of 5% or more, based on a fresh valuation at the time. Once your own share reaches 90% or more, any further top-up has to take you all the way to 100%.

Land and Buildings Transaction Tax (LBTT)

LBTT kicks in on properties over £145,000, though first-time buyer relief can reduce what you owe. Your solicitor will talk you through this as part of the conveyancing process.

Frequently asked questions

Is the First Homes Fund a grant or a loan?

Neither, exactly. It's an equity stake. The Government owns a percentage of your home rather than lending you cash to repay with interest. You settle up when you sell, increase your share, or remortgage in a way that clears it.

Can I use the First Homes Fund with a Help to Buy ISA?

Yes. A Help to Buy ISA or Lifetime ISA can be used towards your deposit alongside the First Homes Fund.

What happens if my house sale falls through after I've paid the application fee?

You get the First Home Funds £650 fee back in full, provided you haven't given false or misleading information on your application.

Can I increase my share later to own 100% of my home?

Yes, this is called staircasing. You can buy out the Government's stake in increments of 5% or more, based on a current valuation, at any time. Once you're at 90% or above, the next increase has to take you to full ownership.

How long do I have to complete my purchase once I'm approved?

You have three months from your Award Letter to conclude missives, then a further six months to complete the purchase. Miss the first deadline, and your application is cancelled, meaning you'd need to reapply.

The bottom line

The First Homes Fund can make a genuine difference if you're trying to buy your first home in Scotland and the numbers are tight. It's not free money, and it's not right for everyone, but for the right buyer it can shave years off the time it takes to get a deposit together.

If you're weighing up whether it fits your situation, get in touch for a free, no-obligation chat about your options by completing our contact form here.

or 📞 01506 537111 or 📧 enquiries@greenshootsfinancial.com

This article is general information, not personalised financial advice. Mortgage and scheme terms can change, so always check the latest details on gov.scot or with your adviser before applying. Greenshoots Financial is authorised and regulated by the Financial Conduct Authority.

Please note your home may be repossessed if you do not keep up repayments on your mortgage.