What Is a First-Time Homebuyer?

First-time homebuyers often qualify for special benefits, such as lower minimum 澳洲幸运5开奖号码历史查询:down payments, special grants, and assistance with paying 澳洲幸运5开奖号码历史查询:closing costs, that are sponsored by state and federal governments. Many lenders offer first-time homebuyers incentives🅷 and special loans.

The term first-time homebuyer generally refers to a person who is buying a 澳洲幸运5开奖号码历史查询:principal residence for the very first time. However, the definition is sometimes more generous. The term is not age-specific, so a first-time buyer 澳洲幸运5开奖号码历史查询:can be in their 20s, 30s, 40, or of any age.

There are various government programs to assist some first-time homebuyers. Also, the IRS allows early withdrawals from retirement savings accounts to these first-time buyers. There are even some programs that are 澳洲幸运5开奖号码历史查询:not strictly for first-time buyers.

Understanding First-Time Homebuyers

Strictly speaking, a first-time homebuyer is an individual who is purchasing a primary residence for the first time. This home is deemed the homebuyer's 澳洲幸运5开奖号码历史查询:principal residence, or the pr𓂃imar𝓀y location that the person inhabits.

It may also 🌜be referred to as their primary residence or main residence. Keep in mind, though, that a principal residence may not always be a conventional house. For instance, it could be a boat that someone resides on full-time.

The 澳洲幸运5开奖号码历史查询:U.S. Department of Housing and Urban𝓰 Deve🀅lopment (HUD) expands that definitio💜n even further. According to the agency, 🐭a first-time homebuyer is:

• Someone who hasn't owned a principal residence for the three-year period ending on the date of purchase of the new home
• An individual who has never owned a principal residence even if the person's spouse was a homeowner
• Any single parent who previously owned a home with an ex-spouse
• A displaced 澳洲幸运5开奖号码历史查询:homemaker who only owned property with a spouse
• A person who owns property that is not in compliance with local or state building codes and can't be brought into compliance

First-time homebuyers who fall into any of the above categories may be eli🔯gible for certain government-sponsored programs that can offer financial assistance.

Fannie Mae's Definition of First-Time Homebuyer

Like HUD, Fannie Mae defines a first-time homebuyer as a person who has not🌱 owned a residential property in the last three years.

The Federal National Mortgage Association, generally known as Fannie Mae, works to extend home ownership to more Americans through a number of programs. Its HomeReady program assists homebuyers with unconventional income sources and as little as 3% to put down on a mortgage.

Its consumer website has the details on its programs to assist homebuyers in buying or upgrading a home.

Fannie Mae does not originate mortgages. It buys mortgages that banks originate, guarantees their repayment, then packages them for resale on the secondary market. This encourages lenders to grant more mortgages to buyers with less-than-ideal financial circumstances.

Federal Housing Administration (FHA) Loans

The Federal Housing Administration (FHA) has been working since 1934 to help homebuyers with modest means to buy homes. Their programs aren't restricted to first-time homebuyers, although they can be particularly relevant to first-time buyers struggling to qualify for a loan.

Qualified applicants can put down as little as 3.5% as a down payment, and the FHA's credit qualifications are less strict than a bank's.

The FHA also offers reduced closing costs, helps seniors stay in their own homes, and helps homeowners finance energy-efficient updates.

It doesn't do this by issuing mortgages but by backing mortgages issued by private lenders like banks. The FHA guarantees the mortgage so that the bank doesn't turn down a less-than-ideal applicant.

Any bank that is "FHA-approved" has these loans available.

U.S. Department of Agriculture (USDA) Benefits

The U.S. Department of Agriculture's homebuyer assistance program is targeted at people who want to buy or upgrade homes in rural areas that are currently in poor condition.

Called the SFH Guaranteed Loan♐ Program, it offers up to 100% financing for people who want to buy and upgrade a home or upgrade a home they already own.

Like the FHA program, this is a loan guarantee to a bank, not a loan from the government.

Loan applicants ne🌊ed not be low-income. They can have incomes up to 115% of the national ave✤rage.

🌱U.S. Department of Veterans Affairs (VA) Benefits

The U.S. Department of Veterans Affairs (VA) helps first-time homebuyers who are active-duty military members, veterans, and surviving spouses. These VA loans provide ไcompetitive interest rates and require no down payment. The VA guarantees part of the loan.

With a VA loan, first-time homebuyers aren’t required to pay for 澳洲幸运5开奖号码历史查询:private mortgage interest (PMI), and they do not need to main𒆙tain a minimum cre🅘dit score for eligibility.

If the borrower later struggles to make payments on the mortgage, the VA can negotiate with the lender on the person's behalf.

Lender-Offered Benefits

Certain lenders provide first-time homebuyers with perks that are sponsored by the government. For instance, first-time homebuyers with low to moderate income levels may 澳洲幸运5开奖号码历史查询:qualify for grants or loans that don't require repayment 𓂃as long as the borrower remains in the home for a certain period of time.

Closing cost༺ assistance may also be available depending on individual circumstanꦿces.

All of these options are provided through government-sponsored programs. Eligibility varies based on homebuyers' 澳洲幸运5开奖号码历史查询:credit scores, income levels, and local requirements.

If you want to research your options, HUD's site on FHA Loans is a good place to start.

IRS Benefits

A first-time homebuyer may be able to withdraw funds from an individual retirement account (IRA) without incurring the 10% early-distribution penalty that is ordinarily applied to IRA 澳洲幸运5开奖号码历史查询:distributions that occur before the IRA owner reaches 59.5 years old.

The purchase does not need to be a traditional home for the individual to qualify as a first-time homebuyer, but it must be the person's principal residence. For example, it could be a houseboat that will be used as a residence.

The maximum amount that may be distributed from the IRA on a penalty-free basis for this p༺urpose is $10,000. This is a lifetime limi🗹t.

For married coupl𝐆es, the limit applies separately to each spouse. This means that the combined limit for a married couple is♛ $20,000.

The Bottom Line

澳洲幸运5开奖号码历史查询:A first home purchase is a major hurdle for all but the wealthiest Americans. A number of federal government programs are targeted at first-time homebuyers. Mostly, they are in the business of underwriting mortgages so that qualified applicants can get into a house with a smaller down payment, an imperfect credit score, and a decent but not lavish income.