According to the Department of Housing and Urban Development, the definition of a first-time home buyer is an individual who meets any one of the following five conditions:
- A person who has not owned a main residence for the preceding three years, beginning on the day the property was purchased. This includes a partner (Both are deemed first-time homeowners provided they pass the required criteria.)
- A person who has only owned a spouse and is a displaced homemaker.
- A divorced single parent who has solely owned property from a previous marriage.
- A person who has only owned a property that failed to comply with state, municipal, or model building codes and could not be brought into compliance for less than the cost of constructing a permanent structure.
- A person who has only possessed a primary home that is not firmly attached to a permanent foundation as required by law.
Frequently Asked Questions for Home Buyers
Q. What are first-time home buyer programs?
A. There are numerous loan programs for first-time home buyers. Some first-time home buyer programs provide down payment assistance or money for the closing costs. The HomeReady mortgage program is an exceptional first-time home buyer program. The down payment requirement is only 3%.
ManyHUD housing agencies can lead first-time home buyers to special loan programs. The Federal Banks also provides funding for first-time home buyers.
Q. What should a first-time home buyer know?
A. First-time home buyers should read 10 first-time home buyer tips
- Get your free credit report!
- Get your papers in order!
- Get PRE APPROVED - not PRE QUALIFIED
- Find a lender who uses the rapid rescore program in conjunction with a credit simulator.
- Get an estimate of the closing costs before making an offer
Q. What are the benefits of being a first-time home buyer?
A. first-time home buyers are usually eligible for a discounted interest rate, down payment or reduced closing costs.
Q. What is a first-time home buyer grant?
A. Many state and county governments offer grants to first-time home buyers to encourage homeownership. As mentioned earlier, even the Federal Home loan banks offers grant money. Some grant programs will pick up the closing costs and/or down payment, and cover the cost with a second, forgivable mortgage.
Q. Can a seller refuse to pay closing costs?
A. Sellers are not required to pay closing costs, but lenders and even the real estate agent is permitted to pay a percentage of the closing costs. Ask them. What's the worst thing that could happen?
Q. Can I get a mortgage with a 550 credit score?
A. The FHA loan program will allow a credit score as low as 500, with a 10% down payment. The threshold is 580 for the minimum down payment of 3.5%
Q. Can you be denied a FHA loan?
A. You can be denied an FHA loan and any other loan for that matter. Insufficient income, time on the job, lack of cash savings and unsatisfactory credit can be a cause for denial.
Q. Do first-time buyers pay closing costs?
A. Of course first-time home buyers pay closing costs, and down payment, but, qualified first-time home buyers may be eligible for special financing.
Q. How can I avoid closing costs?
A. You can't, but a cooperative seller is permitted to pay a percentage of the closing costs. See seller assist
Q. How fast does your credit score go up after paying the debt?
A. Do you know about the rapid rescore program? Rapid rescore can update the credit score in as little as 5 days. Read more about rapid rescore