Who Qualifies as a First-Time Homebuyer?

We all know the story: A part of you is considering homeownership, however one other half is not sure whether or not you’ll qualify as a first-time homebuyer. The mortgage course of can appear intimidating the primary time round, which is totally comprehensible. You haven’t owned a house earlier than! 

To not fear, although, as a result of APM is right here to shed some mild on what it means to be a first-time homebuyer, the mortgage applications accessible to you, and any questions you could have on gadgets like minimal credit score scores, down cost help, rates of interest, closing prices, revenue limits, and extra.

So let’s get to it!

What Is a First-Time Homebuyer?

Let’s begin with the fundamentals: First-time homebuyers are typically outlined as those that haven’t owned a major residence throughout the previous three years. This definition can fluctuate barely relying on which mortgage applications you’re contemplating.

Who Qualifies as a First-Time Homebuyer?

It could sound unusual, however opposite to widespread perception, the time period “first-time homebuyer” refers to extra than simply individuals who haven’t owned a house earlier than. You should still be thought of a first-time homebuyer in the event you owned a house up to now however meet sure standards.

As an illustration, in the event you’ve skilled a big life occasion that prevented you from buying a house up to now three years, corresponding to a divorce or a foreclosures, you might nonetheless qualify for some first-time homebuyer mortgage applications.

Naturally, the {qualifications} can fluctuate primarily based on the mortgage program. With a VA mortgage, supplied by means of the Division of Veterans Affairs, you should be an active-duty service member, veteran, or surviving partner of both group. A primary-time homebuyer would nonetheless have to fulfill all of the {qualifications} for the VA mortgage as a first-time homebuyer, along with proving their eligibility standing.

Can You Have Beforehand Owned a Residence?

As we simply touched on, sure. There are cases the place you might need owned a house earlier than however can nonetheless qualify for a first-time homebuyer program. Usually, an important stipulation is that you would be able to’t have owned a major residence throughout the previous three years. 

What Packages Are Obtainable to First-Time Homebuyers?

There are many mortgage applications created particularly to assist first-time homebuyers obtain their objective of proudly owning a single-family home. These applications are sometimes supplied by means of authorities entities, such because the Federal Housing Administration (an FHA mortgage), the Division of Veterans Affairs (a VA mortgage), and the Division of Housing and City Improvement (a HUD mortgage).

For instance, the FHA mortgage program supplies some advantages to first-time homebuyers, together with decrease down cost necessities and decrease minimal credit score scores. VA loans additionally supply those that qualify as a first-time homebuyer—and who’re veterans/active-duty service members/surviving spouses—the possibility to buy a house with no down cost. There’s no higher type of down cost help than that!

You’ve additionally bought Fannie Mae and Freddie Mac. They provide mortgage applications that help first-time homebuyers in accessing inexpensive mortgage choices with aggressive rates of interest and versatile eligibility necessities. These embrace financing as much as 97% of the acquisition worth, that means that you just make a 3% down cost. 

You can even use nontraditional revenue sources corresponding to alimony funds, Social Safety, rental revenue, and so forth, to qualify for these assured loans. A mortgage lender can provide the lowdown on all of the engaging mortgage applications that could be best for you.

Many individuals additionally overlook the varied incentives for buying in rural areas. The U.S. Division of Agriculture presents loans which might be assured by the USDA Rural Improvement Assured Housing Mortgage Program. These loans typically supply no down funds and decrease rates of interest in the event you purchase in rural areas. 

Do You Must Be a First-Time Homebuyer to Take Benefit of Down Fee Help?

Down cost help (DPA) applications are incessantly accessible to first-time homebuyers to assist mitigate the upfront prices related to shopping for a single-family dwelling. These can embrace the down cost and shutting prices.

You might assume that these applications are usually for first-time patrons, since they could want essentially the most assistance on their first single-family dwelling buy. However many DPA applications are open to different patrons as effectively. These can embrace those that meet sure revenue limits, minimal credit score scores, and different standards, no matter whether or not they’ve owned a house earlier than. DPA applications are inclined to fluctuate by location and could also be supplied on the federal, state, or native ranges.

Want Extra Assist with Your Residence Buy?

The time period “first-time homebuyer” can apply to extra than simply people who’ve by no means owned a house earlier than. Those that haven’t owned a principal residence throughout the previous three years should qualify for numerous mortgage applications and shutting price help applications designed to make homeownership extra accessible for everybody.

Even with all this info, it’s necessary to seek the advice of a educated mortgage lender when figuring out who qualifies as a first-time homebuyer. Our APM Mortgage Advisors can information you thru the method and provide help to uncover which mortgage applications you qualify for.

Whether or not you’re keen on an FHA mortgage, a VA mortgage, or a traditional mortgage, there are nearly actually choices on the market that may suit your monetary scenario.

So we’ll go away you with this: Homeownership is inside attain for a lot of, many individuals, no matter whether or not you’re a first-time homebuyer or have owned a house earlier than. With the suitable assets and steerage, you’ll be able to obtain your dream of proudly owning a house. 

Contact an APM Mortgage Advisor at the moment to discover your choices and get on the trail to homeownership!