Potential benefits of a first-time homebuyer status
Quick insights
- First-time homebuyers may qualify for programs or resources that could make the path to homeownership more accessible.Â
- Some of the potential benefits include lower down payment options, grants or forgivable loans that may help reduce upfront costs.
- Certain programs could also provide longer-term stability, such as steady payments with a 30-year fixed rate mortgage.
Purchasing your first home is a major milestone that can feel equal parts thrilling and intimidating. The exciting part? First-time homebuyers could unlock a variety of benefits designed to make the homebuying journey more approachable. Think potentially more flexible approval requirements and grants that could help with upfront costs.
When are you considered a first-time homebuyer?
You are generally considered a first-time homebuyer if you have not owned a primary residence in the past three years. Depending on the loan program and lender, some distinctions or exceptions may apply. For instance, single parents or displaced homemakers who previously owned a home with a spouse might still qualify as first-time homebuyers.
A displaced homemaker or a single parent may also be considered a first-time homebuyer if the individual had no ownership interest in a residential property during the preceding three-year period other than an ownership interest in the marital residence with a spouse. If a displaced homemaker or a single parent solely owned the marital residence, or solely or jointly owned a second home or investment property, the individual may not be considered a first-time homebuyer.
First-time homebuyer benefits
Being a first-time homebuyer may open the door to opportunities that make homeownership feel more possible. Here are some potential benefits:
- Low to no down payment: Some loan programs allow buyers to pay as low as 3% or even no down payment, depending on eligibility and specific borrower requirements.
- Grants: State and local housing agencies may offer grants that do not need to be repaid, potentially helping with housing costs like the down payment or closing expenses. Depending on where you want to live, it may be worth checking the state government’s resources for first-time homebuyers as you shop for houses.Â
- Forgivable loans: Certain programs may provide secondary loans for upfront costs that could be forgiven after a set number of years if you continue to live in the home.
- Federal tax credits: Some loan programs make it possible to claim tax-related benefits that could possibly lower your overall costs at tax time. Please consult with a tax professional for personalized guidance.
First-time homebuyer programs
There are specific programs that may be available to help support first-time homebuyers financially.Â
Federal government programs
- FHA loans: Backed by the Federal Housing Administration, FHA loans might allow lower credit scores or smaller down payments (as low as 3.5%).
- VA loans: VA loans are available to qualifying veterans, active-duty service members and certain spouses. VA loans could offer no down payment and no requirement for private mortgage insurance (PMI).
- Conventional 97 mortgage: Also known is a 3% down loan, this mortgage option allows qualified homebuyers to purchase a home with a 3% down payment on a conforming loan.Â
State-level programs may be available, as well. For more information, consider reviewing available resources where you want to buy a house.Â
How to qualify for first-time homebuyer benefits
Qualifying for certain first-time homebuyer programs can depend on factors like income, credit history and location. Some assistance programs may require buyers to complete a first-time homebuyer education class, for example. The income limits may not just vary by program, but also the median income in an area. Checking guidelines of specific mortgage assistance programs, including any that are available at the state and federal level, can help you determine which mortgage options you could be eligible for.Â
Additionally, if you’ve chosen a mortgage lender, consider asking about the benefits or programs available to first-time homebuyers.Â
In summary
Purchasing your first home is a big step, but there may be a variety of loan programs and benefits available to help make the process more affordable and manageable. From less stringent loan requirements to state grants, first-time homebuyers have many tools to support their homebuying journey.Â
With the right preparation and help from a Home Lending Advisor, you could be well positioned to leverage these opportunities and move confidently toward homeownership.
