Did you know that there are several benefits to being a first-time homebuyer? Did you also know that there are several definitions for being a first-time homebuyer, and you may be qualified? Qualifying as a does not mean that you have never owned a home before. Let’s take a look at what qualifies individuals for this status and why it is beneficial.
What is a first-time homebuyer?
The United States Department of Housing and Urban Development (HUD) sets the criteria for first-time homebuyers. Lenders look to these stipulations to identify consumers and extend benefits.
You can qualify as a first-time homebuyer:
- If you have had no ownership in a principal residence during the three years ending on the date you purchase a property. This can also include your spouse, so if either of you meets these criteria, you are considered first-time homebuyers.
- If you are a single parent who has only owned a home with a former spouse while married.
- Those who are displaced homemakers and only owned a home with a spouse.
- If you are someone who has only owned a principal residence not permanently fixed to a permanent foundation according to regulations.
- If you have owned a property that is not in compliance with local and state building codes and cannot be brought into compliance for less than constructing a permanent structure.
Benefits of Being a First-Time Buyer
There are more benefits to being a first-time buyer of a home than just the immense pride that naturally follows when you have closed on the property.
Qualifying as a first-time buyer can give you access to grants, forgivable loans for closing costs, down payment assistance, federal tax credits, and low or no down payment loans.
These benefits help families throughout the United States to acquire property when they might otherwise feel it is out of reach for them. If you meet any of the criteria mentioned above, it is worth checking into your local and state programs.
Requirements for First-Time Home Buyer Loans
The criteria to be approved for this type of loan vary from the kind of mortgage and lender you choose; however, here are some general guidelines.
- VA Loans: If you are a veteran, know that down payments are not generally required for a loan that is backed by the Department of Veteran Affairs. You also do not have a minimum FICO score needed, but lenders will still look for a score in the range of 580-620 or better.
- Conventional Loans: If you are seeking a traditional loan, you will need a score of 620 or better, a debt-to-income ratio below 50 %, and a 3% down payment. Note that the better your credit score is, the better your chances will be for approval.
- FHA Loans: FHA loans allow lower credit scores, but if you want a down payment as low as 3.5%, you will need a score of 580. However, if you have a 10% down payment ready, your score can be as low as 500.
- USDA Loans: If you are looking for another no-down-payment option, then you may look into a USDA backed loan. These loans are for rural or suburban properties, and income limits do apply to these. As a general rule, a FICO score of 640 is required, but exceptions can be made with proper documentation.
Here at Rob Roland Realty, our advice is to look at all your options instead of going for the first one you may qualify for because lenders can add conditions to loans, so do not be afraid to ask questions to understand everything in front of you.
Buying is more feasible than you may have first thought even if you have been through some difficult situations. That is why the definition of a first-time homebuyer has several qualifications. If you are looking to buy a property and need help don’t hesitate to contact us today, we are here to help you every step of the way!