Why Qualify As A First Time Home Buyer?

First time home buyers often have access to benefits that aren’t available to repeat buyers, such as:

• More affordable mortgages with lower minimum down payments, reduced interest rates, and/or decreased mortgage insurance.
  
• Assistance with down payments and/or closing costs.
• Access to first-time homebuyer support programs in many cities and counties.

General Criteria For First Time Home Buyer Status

No Homeownership in the Past Three Years:

Most programs define a first-time home buyer as someone who has not owned a home in the past three years. This includes ownership of primary residences, vacation homes, and investment properties.

Primary Residence Requirement:

The property you are purchasing must be used as your primary residence. Investment properties or vacation homes do not qualify.

Income Limits:

Many first-time home buyer programs have income limits based on the median income of the area where you are purchasing. These limits ensure the programs assist those who need it the most.

Purchase Price Limits:

There may be limits on the maximum purchase price of the home you are buying. These limits vary by location and are often based on the median home prices in the area.

Personal Financial Criteria For First Time Home Buyer Status

• A minimum credit score of 620 (some programs require at least 640 or 680)
• A down payment of 3% or 3.5%, depending on the loan program
• A debt-to-income (DTI) ratio of 43% or lower
• Consistent, verifiable income and at least two years of employment history

Common First Time Home Buyer Programs

FHA Loans (Federal Housing Administration):

Credit Score: Minimum credit score of 580 (with a 3.5% down payment) or 500 (with a 10% down payment).

Down Payment: As low as 3.5% of the purchase price.

Debt-to-Income Ratio: Generally, should not exceed 43%, but some lenders may allow up to 50%.

VA Loans (Department of Veterans Affairs):

Eligibility: Available to veterans, active-duty service members, and certain members of the National Guard and Reserves.

Down Payment: No down payment required.

Credit Score: No minimum credit score requirement, but most lenders require a score of at least 620.

Conventional Loans:

First-Time Home Buyer Programs: Some conventional loan programs are specifically designed for first-time buyers, offering lower down payments and flexible credit requirements.

Down Payment: As low as 3% of the purchase price.

Credit Score: Typically, a minimum score of 620 is required.

State and Local Programs:

Down Payment Assistance: Many states and local governments offer down payment assistance programs, grants, and forgivable loans to first-time home buyers.

Housing Counseling: Some programs require attendance at home buyer education classes.

Steps To Qualify

Review Your Financial Situation:

Check your credit score, reduce debt, and save for a down payment.

Research Available Programs:

Look into federal, state, and local first-time home buyer programs to understand the benefits and requirements.

Get Pre-Approved for a Mortgage:

Work with a lender to get pre-approved, which will give you an idea of how much you can afford and make you a more attractive buyer.

Complete Home Buyer Education:

Some programs require you to take a home buyer education course to better understand the process and responsibilities of homeownership.