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Monday 2 October 2023 Dublin: 14°C
# Loan to Value
First time buyers no longer need 20% deposit on properties
Those mortgage rules have been reviewed.

FIRST-TIME BUYERS will no longer need to have a deposit of 20% on properties above a certain value.

The rule was scrapped following a review of mortgage measures by the Central Bank.

Regulations have been in place since February 2015, the aim of the rules is to prevent spiralling bank credit fuelling house price rises. However, the Central Bank have made changes following a review of the procedure.

In was announced this afternoon that a first-time buyer will now only need a deposit worth 10% of a property, regardless of its price. However, the 20% deposit rule will continue to apply to second-time and subsequent buyers.

The 3.5 times ceiling on the loan to income (LTI) ratio remains. Requirements for buy to let borrowers and the exemptions for negative equity mortgage borrowers from the measures also remain unchanged.

The are the changes that will be effective from 1 January 2017:

  • The ceiling on the loan to value (LTV) ratio for all first time buyers will be set at 90%. This is a shift from the current requirement, which puts the ceiling at 90% for loans up to €220,000 but at 80% for the balance of loans above €220,000.
  • The 20% minimum deposit requirement (i.e. maximum LTV ratio of 80%) continues to apply to second and subsequent buyers.
  • The structure of the proportionate LTV allowances is amended. 5% of the value of new lending to first time buyers will be allowed above the 90% LTV limit and 20% of the value of new lending to second and subsequent buyers for primary residences will be allowed above the 80% LTV limit. This replaces the current requirement which allows 15% of total lending for primary dwellings (the sum of lending to first time buyers and second and subsequent buyers) above the LTV limits.
  • The current two-month valuation period will be extended to four months in recognition of the fact that a portion of house sales can take longer than the average three months to conclude.

Governor Philip Lane said: “Over the past 18 months, the measures have helped to ensure that those who buy homes are better prepared to manage their mortgage payments in the event of a future downturn in the economy or in the housing market.

“While our review process affirmed the value of the overall framework, some modifications to the measures were suggested by our evidence-based analysis.

The 90% loan to value ratio limit for all first time buyers simplifies the overall framework, with only 5% of lending permitted above this level.

“The 20% allowance for lending above the 80% loan to value ceiling for second and subsequent buyers is broadly in line with current lending patterns. The loan to value requirements for all other buyers will remain in place. Taken together, these measures constitute a sustainable framework to underpin our financial stability objectives.”

Finance Minister Michael Noonan has welcomed the Central Bank’s changes saying that, in tandem with the government’s help to buy scheme, they “will be of great assistance to first-time buyers”.

“These two measures, which reinforce each other, will have a significant impact on the capability of first-time buyers to fund their first family home,” the minister said.


The Professional Insurance Brokers Association (PIBA) is among those who have been critical of the Central Bank’s decision on retaining the 20% deposit rule for second-time buyers. The PIBA has described that decision as “very unjust”.

An initial version of this story was published this morning and was updated since the announcement was made by the Central Bank.  

Additional reporting by Cliódhna Russell. 

Read: It’s taking up to a third of a working couple’s income to pay the mortgage on their first home >

Read: Investors blamed for ‘dramatic’ rise in Dublin house prices >

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