Who Qualifies as a First-Time Homebuyer?

Money SmartsJune 7, 2024

First-time homebuyers often qualify for many perks throughout the homebuying process. You may even be considered a first-time homebuyer and not realize it. A first-time homebuyer is generally defined as someone who has not owned a home in the past three years.

In most cases, to be eligible for first-time homebuyer loans and benefits, you need to fit the following criteria:

• You’ve never owned a home before.
 
• You previously owned a home, but for the past three or more years, you’ve been renting or residing in someone else's property.
 
• You and your partner owned a home but now you’re buying a home on your own.

How to Qualify for First-Time Homebuyer Grants

Many first-time homebuyers can qualify for down payment assistance and grants. The groups of people who qualify as first-time homebuyers, according to the U.S. Department of Housing and Urban Development, generally fall into the following categories:

• Renters. This includes someone who has never owned a home. Examples include young adults moving out of their parents’ home for the first time, or older adults who’ve never owned property before and are currently renting.
 
• Homeowners Re-Entering the Market. If you previously owned a home but have not owned one in the past three years, you’re considered a first-time homebuyer. Returning to the market after a three-year break enables you to take advantage of the benefits offered to first-time buyers, too.
 
• Investment Property Owners. Those who own investment properties can still be considered first-time homebuyers if they rent their primary residence and haven’t owned their main home in the past three years. This status isn’t disqualified by owning an investment property.
 
• Single Parents Returning to Work. Single parents who previously shared ownership of a home with their former partner can still qualify as first-time homebuyers. This applies regardless of whether their name was on the title or mortgage.
 
• Caregivers Who Have Left Their Jobs. Individuals who’ve taken time off work to provide unpaid care for a family member may qualify as a first-time homebuyer.
 
• Individuals Who Own Structurally Unstable Homes. People who own houses that’re structurally unsound may qualify as first-time homebuyers if the cost of fixing the issues surpasses the home's worth. This typically applies to older or deteriorated properties that have failed safety inspections.
 
• Mobile Homeowners. An individual who owns a mobile home that’s not permanently fixed to a foundation may qualify as a first-time homebuyer. This category includes homes that are portable or temporary. You may need to take a first-time homebuyer class to qualify for financial assistance such as grants, loans, or help with down payments and closing costs. These classes guide you through the homebuying process, including creating a budget, applying for a mortgage, closing on a property, and more.

The Benefits of Being a First-Time Homebuyer

First-time homebuyers qualify for exclusive benefits, including down payment assistance, low down payments, lenient credit requirements, homebuyer grants, and home purchase assistance.

To benefit from these advantages, you must satisfy all the criteria for a first-time homebuyer loan. These criteria include your income, credit rating, and debt-to-income ratio. Additionally, you may qualify for a grant that assists with the initial payment and closing expenses, particularly if you meet the prerequisites for a first-time homebuyer loan.

Making Your Homeownership Dreams a Reality

Various organizations provide benefits for first-time homebuyers on a local, state, and national scale. Look to your own financial institution or local credit union. Many offer first-time homebuyer seminars and assistance from housing counselors. Your real estate agent might also offer resources and suggestions, too.

Each organization that provides benefits for first-time homebuyers establishes its own eligibility requirements. The criteria for approval differs depending on the program and where it’s located. For instance, certain programs for first-time homebuyers may have restrictions on income levels or the cost of the home. There are also homebuying aid programs, like Good Neighbor Next Door, that cater to individuals working in professions such as teaching, emergency response, and law enforcement.

Ultimately, if you’re a first-time homebuyer, consider researching your options, understanding your budget, and living within your means to make homeownership a dream come true.

GLCU is offering a $5,000 lender credit through June 30^th, 2024 to help make homeownership more accessible. Learn more about the credit and check out our other home loan options. If you’re buying a home for the first time, check out our monthly first-time homebuyer seminars.

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