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First Homes Fund Launches

The First Homes Fund is now open: what Scottish first-time buyers need to know in 2026

Saving a deposit is, for most people, the single hardest part of buying a first home. Prices have climbed, rents have eaten into savings, and plenty of would-be buyers who could comfortably manage the monthly mortgage simply can’t bridge the upfront gap. That’s exactly the barrier the Scottish Government is aiming at with the return of the First Homes Fund — and the good news is that the scheme has now launched and is open for applications.

Here’s a plain-English guide to what the scheme offers, who qualifies, how the shared-equity model actually works, and exactly how to apply.

What is the First Homes Fund?

The First Homes Fund is a Scottish Government shared-equity scheme designed to help first-time buyers get onto the property ladder by contributing towards their deposit. Eligible buyers can receive a government equity contribution of up to £10,000 towards a home valued at £300,000 or less.

It’s a relaunch of an earlier scheme that ran from December 2019 to March 2022 before closing. The previous version offered a larger contribution (up to £25,000), so the 2026 fund is more modest per buyer — but it’s expected to reach a far wider group, with the Scottish Government anticipating support for around 2,000 households in its first 100 days and roughly 50,000 over the course of this parliament.

Applications are now open. The scheme is administered by Link Group on behalf of the Scottish Government, and you (or your mortgage adviser) apply online — more on exactly how to do that below.

How does the shared-equity model work?

This is the part that’s most often misunderstood, so it’s worth being clear: the First Homes Fund is not a traditional loan.

There are no monthly repayments to the government and no interest is charged. Instead, the government takes an equity share in your property — a percentage stake equal to the proportion it contributed towards your purchase. You own your home and hold the title to it in the normal way. When you eventually sell, you repay the government the same percentage share of the sale price.

A simple worked example:

  • You buy a home for £200,000.
  • The government contributes £10,000 — that’s 5% of the purchase price.
  • Years later, you sell for £250,000.
  • The government receives 5% of the sale price, which is £12,500.

Because the government’s stake is a percentage rather than a fixed sum, its share rises and falls with your property’s value. (The percentage is based on the purchase price or the valuation, whichever is lower.) That means you give up a slice of any increase in value when you sell — but in return, you get onto the ladder sooner and with a smaller deposit of your own. For many buyers, that’s a trade worth making.

Who is eligible?

The scheme is aimed at genuine first-time buyers. To qualify, you’ll generally need to meet the following:

  • You are a first-time buyer — meaning you do not own, and have never previously owned, a property in Scotland, the rest of the UK, or anywhere else in the world.
  • You are buying with a mortgage. Cash buyers aren’t eligible — you’ll need a capital repayment mortgage covering at least 25% of the property value.
  • The property is for you to live in as your main home. You can’t let it out.
  • The purchase price does not exceed £300,000.
  • Your mortgage and other debt repayments come to no more than 45% of your net disposable income — an affordability (or “sustainability”) check carried out as part of the application.

Both new build and existing properties are eligible, provided they sit within the price cap and meet the basic Tolerable Standard for housing.

Buying with someone else? For joint applications, only one of you needs to be a first-time buyer — as long as that person doesn’t own another property at the point your purchase completes. If a joint applicant currently owns a home, it must be sold by the time the purchase completes.

Why the relaunch matters

The deposit hurdle is the reason so many people stay renting for longer than they’d like. By reducing the amount a buyer needs to save themselves, the First Homes Fund makes ownership achievable sooner — and that has knock-on benefits well beyond the individual buyer.

First-time buyers are the foundation of a healthy property market. When they’re able to buy, it keeps chains moving, allowing existing owners to move up, downsize or relocate. Greater activity supports confidence among buyers and sellers alike, and gives developers more reason to invest in new housing.

It’s worth being realistic, too. With the average first-time-buyer deposit in Scotland now well above the £10,000 on offer, the fund won’t remove the affordability challenge entirely — and previous versions proved so popular that funding was allocated quickly. It’s best viewed as a valuable boost rather than a complete solution.

Don’t forget the other costs

A deposit is only one part of the picture. When budgeting for your first home, remember to factor in:

  • Land and Buildings Transaction Tax (LBTT) — Scotland’s equivalent of stamp duty. First-time buyer relief raises the tax-free threshold, which can reduce or remove the bill on lower-priced homes.
  • Legal fees for conveyancing.
  • Property searches and registration dues.
  • Survey or valuation costs beyond the Home Report.

Building these into your plans early avoids unwelcome surprises later in the process.

How to apply

Applications are made online through Link Group, and your Independent Financial Adviser or mortgage adviser can submit the application on your behalf. Before applying, you’ll typically need:

  • Details of your solicitor
  • A Mortgage Decision in Principle
  • Evidence that your mortgage and debt repayments won’t exceed 45% of your net income (the affordability check)
  • For an open-market purchase, a copy of the Home Report; for an off-market sale, a Scheme 1 valuation; for a new build, a signed reservation agreement (and valuation via the mortgage offer or a separate report)
  • Income evidence — three months’ payslips for each applicant, or an SA302 if you’re self-employed, plus any benefit award letters

Broadly, the process runs like this:

  1. Speak to a mortgage adviser about your borrowing and whether the First Homes Fund suits you.
  2. Reserve a new build or have an offer verbally accepted on an existing home.
  3. Apply online with the documents above.
  4. If accepted, you’ll receive an Award Letter explaining how to pay the buyer fee and the timescales you’ll need to meet.
  5. Finalise your mortgage.
  6. Your solicitor handles the signed agreements with Link and the Scottish Government’s solicitor.
  7. Link claims the funding and passes it to your solicitor alongside your mortgage funds, and the sale completes.

A note on the buyer fee and timescales: there’s a £650 buyer fee, payable after your application is approved. It’s refundable if the sale doesn’t go ahead (except in cases of misrepresentation or fraud). Funding is conditional on your missives concluding within 3 months and the sale completing within 6 months after that, so it pays to keep things moving.

Because earlier versions of the scheme were heavily subscribed and funding was allocated quickly, it’s wise to get your finances and paperwork in order without delay.

Frequently asked questions

How much can I receive? Up to £10,000 as a government equity contribution towards your deposit.

What’s the maximum property value? £300,000. Homes above that price are not eligible.

Can I use it for a new build? Yes — both new build and existing homes qualify, as long as they’re within the price cap.

Do I have to make repayments? Not to the government, and no interest is charged. You’ll still make your normal monthly mortgage repayments to your lender. The government recovers its share when you sell.

What counts as a first-time buyer? Someone who has never owned a property anywhere in the world.

Can I apply as a cash buyer? No. You need a capital repayment mortgage covering at least 25% of the property value.

We’re buying together — do we both need to be first-time buyers? No. For joint applications, only one of you needs to be a first-time buyer, provided that person doesn’t own another property when the purchase completes.

Is there a fee to apply? There’s a £650 buyer fee, paid after your application is approved. It’s refundable if the sale falls through (other than in cases of misrepresentation or fraud).

Are applications open now? Yes — the scheme has launched and is open for applications through Link Group, which administers it on behalf of the Scottish Government.

Will the funding run out? Quite possibly. Earlier versions of the scheme were heavily subscribed and allocated quickly, so applying sooner rather than later is sensible.

Thinking about buying your first home?

The First Homes Fund could be the step that finally makes home ownership achievable — and with the scheme now open and strong demand expected, getting things moving quickly will make all the difference. At Morgans, our experienced solicitors can handle the legal side of buying your first home, guiding you through the conveyancing from accepted offer right through to getting the keys.

And if you’re not sure where to start with your mortgage, we can refer you to trusted mortgage brokers who’ll help you secure a Mortgage Decision in Principle and find the right deal for your circumstances. With local knowledge across Fife and a genuinely personal service, we’re here to help you take that first step with confidence.

Get in touch with our team today to talk through your options.

Dunfermline Office Morgans, 33 East Port, Dunfermline, Fife, KY12 7JE Telephone: 01383 620222 Email: enquiries@morganlaw.co.uk

Kinross Office Morgans, 62 High Street, Kinross, KY13 8AN Telephone: 01577 863424 Email: kinross@morganlaw.co.uk

Visit www.morganlaw.co.uk to browse our latest properties and find out more about how we can help.

This article is for general information only and does not constitute legal or financial advice. Scheme rules and the list of participating lenders can change — always check the latest guidance from Link Group and the Scottish Government before applying.

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