A new €400 million affordable purchase scheme has been launched to make new homes a reality for first-time buyers.

Designed in conjunction with mortgage providers and Banking and Payments Federation Ireland (BPFI), the First Home scheme aims to bridge an existing affordability gap by providing buyers with part of the purchase price for their home, in return for the Scheme taking a minority equity stake.

The maximum stake that the Scheme will take is 20pc, if the buyer is also availing of the Government's separate Help to Buy scheme, and 30pc if Help to Buy is not used.

The First Home Scheme application process runs in parallel with the mortgage application process (i.e. mortgage applications should continue to be made separately through participating lenders).

The scheme is available initially to First-Time Buyers and other qualifying homebuyers who are taking out mortgages from AIB (including its EBS and Haven Mortgages businesses), Bank of Ireland or Permanent TSB. Other mortgage providers may join the scheme in the coming months.

It is open to buyers of newly-built houses and apartments in private developments.

Housing Minister Darragh O'Brien said: "This brand new scheme will literally open the door for many First-Time Buyers. Affordability and the chance to buy a home is very much at the centre of this Government's housing policy. In Housing for All, our new housing plan for Ireland, we committed to establishing a scheme, in partnership with participating mortgage lenders, which would make home ownership easier for those who were finding that aspiration just out of reach.

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"This scheme we are launching today will support First-Time Buyers and those seeking a fresh start by helping to bridge the gap between what they can afford and the price of the home they wish to purchase.

"It will make new homes more affordable and easier to access for First-Time Buyers, helping them get their foot on that crucial first rung of the property ladder. It will encourage the increased development of new build homes.

"This Government is working to give young and not so young people a real chance to buy their own home. Today's announcement is another step in that direction."

Michael Broderick, interim CEO of the First Home Scheme, commented: "This is an exciting scheme to help First-Time Buyers realise their ambition of buying a home. It will help close the affordability gap while ensuring people borrow at a level that reflects their individual financial circumstances.

"Our job is to make it as easy as possible for First-Time buyers to benefit from this support and help them get keys in their hands as quickly as possible.

"We are committed to providing easy access and a high-quality service.

"The Scheme is just one of a wide range of Government measures aimed at making it easier to buy a home. Similar schemes have worked effectively in other countries and we plan to make a real and positive difference for the people who use it."

Brian Hayes, CEO of Banking and Payments Federation Ireland, added: "We are delighted to support this ground-breaking partnership between the State and the participating lenders to make it easier for First-Time Buyers to own their own home.

"The First Home Scheme is the product of strong and constructive collaboration between all of its stakeholders, all with the shared aim of helping people get on the property ladder.

"We think this scheme is capable of making a real difference for the people who can benefit from it and we look forward to seeing it achieve its aims in the months and years ahead."

Applications can be made today online at www.firsthomescheme.ie.