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Do You Count as a First-Time Homebuyer? The Answer Might Surprise You

Many people — even repeat homebuyers — can qualify for first-time buyer programs and assistance. Use this guide to see what you qualify for.

Author
By Aly J. Yale

Written by

Aly J. Yale

Writer

Aly J. Yale is a personal finance journalist with over 10 years of experience. Her work has been featured on Forbes, Fox Business, The Motley Fool, Bankrate, and The Balance.

Edited by Reina Marszalek

Written by

Reina Marszalek

Senior editor

Reina is a senior mortgage editor at Credible and Fox Money.

Updated September 20, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

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Many mortgage and down payment assistance programs are designed for first-time homebuyers. While this designation includes consumers who have never bought a home before, repeat buyers can sometimes qualify, too.

What is a first-time homebuyer?

The term “first-time homebuyer” isn’t as restrictive as you might think. It often extends to repeat buyers — people who have bought one, two, three, or even more homes in the past.

The catch is how long it’s been since you purchased those homes. For example, the U.S. Department of Housing and Urban Development identifies first-time homebuyers as anyone who has not owned a home in the last three years.

Other parties can qualify, too, including single parents who only owned a home while married to a previous spouse or individuals who owned properties that weren’t on a permanent foundation (e.g., a mobile home).

Who qualifies as a first-time homebuyer?

Many people can qualify as first-time homebuyers — not just those who have never bought a home before.

Let’s look at a few examples of when you may or may not be considered a first-time homebuyer:

Scenario
First-time homebuyer?
You bought a home in 2005, sold it in 2009, and have rented since then. You’re now looking to purchase a new home.
Yes
You bought a home in 2005 with your spouse. You divorced and sold the property in 2019 and are now looking to buy your first home solo.
Yes
You purchased a mobile home (on wheels, not on a permanent foundation) in 2005 and still own it. You’re now hoping to purchase a single-family home.
Yes
You bought a home in 2005 and are selling it now and buying a new property.
No

If you’re considering a home purchase — whether you’re a first-time homebuyer or not — be sure to shop around for the best rates.

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What first-time homebuyers can do

Being considered a first-time homebuyer can qualify you for various loans and assistance programs that can help with your closing costs, down payment, and more.

Here are some of the options that might be available to you as a first-time homebuyer:

FHA loans

Being a first-time homebuyer isn’t required for FHA loans, but they’re great options if it’s your first house or it’s been a while since you’ve bought one.

FHA loans require small down payments, and their credit score standards are lower than on other mortgages out there.

To qualify for maximum financing, you’ll need:

  • A 3.5% down payment
  • At least a 580 credit score
  • A debt-to-income ratio of 43% or less

The property you’re buying must also serve as your primary residence.

Low-down-payment conventional loans

There are several conventional loan programs that first-time buyers can qualify for as well — many of which require very small down payments.

Here are the programs you might consider as a first-timer:

Loan program
Summary
Down Payment
Requirements
HomeReady
Offers low-down-payment options to lower-income buyers
3%
  • Must have a credit score of 620 or higher
  • Must complete a homebuyer education course
  • Must meet certain income requirements
Home Possible
Offers low-down-payment options to lower-income buyers
3%
  • Must meet certain income requirements for your area
  • Requires mortgage insurance
HomePath Ready Buyer
First-time homebuyers can get up to 3% in closing cost assistance
3%
  • Must complete a homebuyer education course
  • Must not have owned a home in the last three years
HomeOne
Offers low-down-payment options to first-time buyers
3%
  • Must complete a homebuyer education course
  • Must not have owned a home in the last three years
  • Requires mortgage insurance

State and local mortgage assistance programs

There are also a slew of programs designed to help first-time homebuyers with closing costs, down payments, and other expenses.

Some are provided as grants (which don’t need to be repaid), while others come in the form of second loans — though many are forgiven if you stay in the home long enough.

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Tip

To find assistance programs in your area, check out the Department of Housing and Development guide for your state.

Tax credits

There are also tax credits you might be eligible for as a first-time buyer, including mortgage credit certificates (MCCs).

These offer a dollar-for-dollar reduction of your federal income tax bill, based on the amount of mortgage interest you pay on your home. In Texas, for example, the MCC is worth 20% of your total interest.

Making an early IRA withdrawal for a down payment

With IRA accounts, you’re typically not allowed to withdraw earnings until you reach 59 1/2 years of age. If you do, you owe a 10% penalty on the withdrawal amount.

First-time homebuyers, fortunately, qualify for an exception. As long as you haven’t owned a house in the last two years, you can withdraw up to $10,000 from your IRA account penalty-free.

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Tip

The money can be put toward buying, building, or rebuilding a home or covering any associated settlement, financing, or closing costs and must be used within 120 days.

If you’re unable to use the funds according to these rules, you’ll have to pay the traditional 10% penalty (unless you’re over 59 1/2).

First-time homebuyer programs open to previous homeowners

Many programs have wide definitions of a first-time homebuyer. With the HomePath Ready Buyer program, for example, you simply can’t have owned a home in the last three years.

Here are some of the programs that extend first-time buyer benefits to those who have purchased homes before:

Loan program
Summary
Requirements
HomePath Ready Buyer
First-time homebuyers can get up to 3% in closing cost assistance
  • Must complete a homebuyer education course
  • Must make a 3% down payment
  • Must not have owned a home in the last three years
HomeOne
Offers low-down-payment options to first-time buyers
  • Must complete a homebuyer education course
  • Must not have owned a home in the last three years
  • Requires mortgage insurance
  • Must make a 3% down payment
Wells Fargo's Your First Mortgage
Offers low-down-payment options to all types of buyers
  • Requires mortgage insurance
  • Must make a 3% down payment
Home Sweet Texas Loan Program
Offers low- and moderate-income Texans down payment assistance up to 5%
  • Must meet certain income requirements
  • Home must fall under a certain purchase price

Individual banks and local credit unions may also offer programs for first-time buyers, so make sure to do your own research.

Meet the expert:
Aly J. Yale

Aly J. Yale is a personal finance journalist with over 10 years of experience. Her work has been featured on Forbes, Fox Business, The Motley Fool, Bankrate, and The Balance.