Almost 60% of local authority home loan applications were recommended for refusal in the first six months of the year.
The Government-backed scheme was established to help people secure a mortgage if they are struggling to get one from a bank.
However, figures provided by the Department of Housing to the Social Democrats show that out of a total of 870 applications up to the end of June, 515 were unsuccessful.
The Local Authority Home Loan scheme allows people to borrow up to €324,000, depending on what part of the country they live in.
Applications are sent to the Housing Agency for assessment.
The agency then makes recommendations to local authorities to approve or refuse applications.
Eligibility criteria was expanded earlier this year to improve access, with a total of €250 million set aside for the scheme in 2023.
However, figures supplied to Social Democrats Spokesperson on Housing Cian O'Callaghan show that 59% of applications were recommended for refusal in the first six months of this year.
Last year, 58% of applications were rejected.
In 2022 of the 2,168 applications made under the scheme, 1,247 were turned down.
Deputy O'Callaghan has called for reform of the scheme.
"The lending caps are still not sufficient to reflect how far property prices have skyrocketed over the last decade," Mr O'Callaghan said.
"For example, a family looking to buy a starter house in most parts of Dublin would be hard-pressed to find one for €360,000.
"With nearly 60% of applicants getting refused it is clear that the Local Authority Home Loan is in urgent need of reform," he added.
The Department of Housing said that there are a number of reasons for refusal such as creditworthiness.
It pointed out that applicants must have been refused a mortgage by two banks before applying.
In a statement, a spokesperson for the department said figures outlining the number of rejected applications in traditional banks are not available.
They added that there is "no evidence at this stage that the approval rate for the Local Authority Home Loan is inappropriate".
"However, the operation of the scheme, including the approval rate, is kept under constant review."
