Local Authority Home Loan Scheme

What is a Local Authority Home Loan?

A Local Authority Home Loan is a government-backed mortgage for first-time buyers and Fresh Start applicants, available nationwide. It covers new or second-hand residential properties and self-builds. The scheme is suitable for individuals who are divorced, separated or have experienced personal insolvency or bankruptcy. The loan is a normal capital and interest-bearing mortgage, repaid monthly through direct debit.

You can borrow up to 90% of the market value of the property.

Maximum market values of the property that can be purchased or self-built are:

• €360,000 in Dublin, Kildare or Wicklow, or
• €330,000 in Cork, Galway, Louth or Meath, or
• €300,000 in Clare, Kilkenny, Limerick, Waterford, Westmeath or Wexford, or
• €275,000 in Carlow, Cavan, Donegal, Kerry, Laois, Leitrim, Longford, Mayo, Monaghan, Offaly, Roscommon, Sligo or Tipperary.

Fresh Start Principle

The Fresh Start principle allows eligible applicants to apply for State affordable housing and loan schemes, including those who previously owned a dwelling with a spouse or committed partner, and those who divested their interest in a previous property through insolvency or bankruptcy proceedings, with a separate creditworthiness assessment conducted by underwriters.

Termination of Relationships – Separation/Divorce/Dissolution of Civil Partnership/Civil Annulment

An exemption to the First Time Buyer eligibility criteria can be applied under the Fresh Start Principle for individuals who have undergone separation, legal separation, divorce, or relinquished their rights to family home property. The applicant must meet certain criteria, including being legally separated or divorced, having no court proceedings pending under family law legislation, having left the family home property without interest, and having the property under the Local Authority Home Loan as the first residential property purchased since leaving.

Insolvency/Bankruptcy

Individuals who exited insolvency/bankruptcy proceedings and previously purchased a home may still be eligible for a Local Authority Home Loan if they sold or divested their home due to insolvency or bankruptcy. The previous purchase or building of the dwelling does not render the applicant ineligible.

Local Authority Home Loan Key Features

The Local Authority Home Loan scheme requires applicants to be first-time buyers or eligible through the Fresh Start principle. They must declare their status and provide their PPSN. Joint applicants must also qualify as first-time buyers, except for those eligible under the Fresh Start principle. Both types of applicants must be first-time buyers.

Applicant Eligibility

The Local Authority Home Loan application requires proof of insufficient mortgage offers from two regulated financial providers in Ireland, dated within 12 months of the application. The applicant must be aged between 18 and 70 years old, have a legal right to reside and work in the State, and have a minimum period of residence required for non-EU/EEA citizens. All Irish citizens are automatically legally resident, while UK citizens are considered legally resident. Non-EEA/EU citizens must be legally resident in Ireland for 5 years, have leave to remain extending to allow 5 years reckonable residence, or have indefinite leave to remain in the State.

Single applicants must not be earning more than €70,000 annual gross income, while joint applicants must not be earning more than €85,000 annual gross income. Non-EEA/EU nationals may apply for a Local Authority Home Loan jointly with their spouse, civil partner, or partner. A credible savings record of at least 12 months duration is required.

Eligibility for a Local Authority Home Loan requires continuous employment for at least two years as a single applicant or as the primary earner in a joint application. Multiple casual employments are not considered eligible. The requirement for continuous employment is relaxed for periods where an applicant was unemployed as a direct result of the COVID-19 situation.

Contract Employment Income

The applicant’s contract income will be considered in repayment capacity if they work in a common industry, have been on contract for at least two years, have a contract with three or fewer months to expiry, and have been confirmed for renewal.

Creditworthiness is determined by factors such as poor payment record, undisclosed borrowings, over 3 months in arrears on rent or repayment, legal action for debt recovery, bankruptcy or insolvency proceedings, and current court order for debt recovery. To be considered credit-worthy, applicants must consent to the Central Credit Register enquiry and complete a judgment search for all named applicants.

Local Authorities have credit committees that assess applications for Local Authority Home Loans. Approved applications receive an Approval in Principle letter, while declined applications are included in a declined letter. Each authority has an Appeals Procedure for dissatisfied applicants to appeal loan decisions. Appeals are considered only if the applicant can prove their application adheres to eligibility criteria. Provisionally approved loans may be appealed after reviewing the original application and supporting documentation. If the original application is not satisfied, a complaint can be made to the Local Authority Complaints Department or the Ombudsman.