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:
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.
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:
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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.