The aim of the study was to compare clients' and named home care (HC) workers' perceptions of clients' functional ability (FA) and need for help and to analyse which client- and municipality-related factors are associated with perceptions of client's FA. The total of 686 Finnish HC clients was interviewed in 2001. Further, the questionnaire was sent to 686 HC workers. FA was assessed by activities of daily living (ADL), which included both basic/physical (PADL) and instrumental (IADL) activities. The association between client's FA and municipality-related variables was analysed by using hierarchical logistic regression models. The findings indicated that clients' and HC-workers' perceptions about what the clients were able to do were similar in the PADL functions, but perceptions differed when it comes to the IADL functions for mobility and in climbing stairs. A smaller proportion of clients compared with HC workers assessed themselves to be in need of help in all ADL functions. Use of home help and bathing services increased the probability of belonging to the 'poor' FA class while living alone and small size of municipality decreased the probability. The study indicates that although clients and workers assessed client's FA fairly similarly, there were major differences in perceptions concerning clients' needs for help in ADL functions. Clients' and workers' shared view of need for help forms a basis for high-quality care. Therefore, the perception of both the clients and workers must be taken into account when planning care and services. There was also variation in clients' FA between municipalities, although only the size of municipality had some association with the variation. The probability that clients with a lower FA are cared for in HC is higher if the clients live in large- rather than small-sized municipalities. This may reflect a better mix of services and resources in large-sized municipalities.