It may surprise you but getting a first-time homebuyer deal doesn't always require that you be a first-time homebuyer. In fact, in most first-time homebuyer programs, the basic requirement is that you must not have purchased or owned a home in the last three years. Qualifying depends on the program's definition of a first-time homebuyer, and that may vary between programs. However, most include the basic three-year non-ownership requirement.
Three Main Mortgage Programs
The main mortgage programs with first-time homebuyer benefits are the Federal Housing Authority program, Veterans Administrative program and state housing finance authority programs. In all of the programs, you may have owned a home but sold it, and as long as it has been at least three years since you sold it "you are right back to being a first-time homebuyer again," according to California Housing Finance Agency.
FHA First-Time Homebuyers
The FHA first-time homebuyer program requires the buyer to fulfill the basic three-year, non-homeownership requirements and have a stable employment record with earnings capable to repay the mortgage. Other requirements, such as an acceptable credit score still apply, but for first-time homebuyers, the minimum required scores, generally, are lower.
VA First-Time Home Buyers
VA first-time homebuyers are also those who have not purchased or owned a home in the last three years. Since VA mortgages are government backed, lenders are not as demanding with applicant qualifications. Down payment requirements are low or nonexistent. Also, since VA loans are backed by the government, "VA loans are easier to qualify for at competitive rates," reports VeteransUnited.com, a VA-approved lender. VA mortgages also have lower monthly payments because private mortgage insurance is not required. A no-down-payment requirement is also a benefit of VA loans.
State Housing Finance Authority Programs
State housing authority programs also consider someone who has not bought or purchased a home in the last three years as a first-time homebuyer. Each state has federally approved housing authorities. Usually, these authorities sell tax-exempt bonds to raise funds for the first-time homebuyer mortgages. State housing authority mortgage programs for first-time homebuyers have lower down payment and looser credit requirements, more competitive interest rates and other benefits. For example, the South Dakota Housing Development requires the standard three-year, non-ownership requirement but excludes mobile homeownership as a prior home. Additionally, since mortgages are funded with tax exempt bonds, there may also be income tax benefits.
First Step to Getting a First-Time Homebuyers Mortgage
Contact the VA, FHA or housing authority that is most convenient. For a VA loan, you must get a Certificate of Eligibility first. For an FHA mortgage, you must visit a loan officer approved to underwrite FHA loans to determine if you qualify for a specific FHA first-time homebuyer loan. Housing authorities are much more independent and have different policies and requirements determined by their authorities' demographics and history. Check with the authority for the first-time buyer application process.
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