First-Time Home Buyer
What is a First-Time Home Buyer?
Not so straight forward
Most easily and simply put, a First-Time Home Buyer is an individual looking to buy their very first primary residence. However, it’s not really as simple as that which is good news for a lot of people.
The Federal Housing Administration (FHA) uses the above definition to define a First-Time Homebuyer. The Department of Housing and Urban Development (HUD) has stated that homeownership stabilizes neighborhoods. It is also a source of freedom and autonomy for Americans. So, while the primary definition of a First-Time Home Buyer is an individual who has never before owned a home, the explanation for HUD and the FHA goes further:
- For couples, if one spouse is a homeowner but the other has never owned a home before, then both spouses, as a cohesive unit, are considered First-Time Homebuyers.
- A displaced homemaker or a person whose primary work has been within and for the home for a substantial number of years, who has only ever owned a home with their spouse, is considered a First-Time Home Buyer.
- Also, a single parent who owned a home with their former spouse is a First-Time Homebuyer for the FHA.
- You are a First-Time Home Buyer too if the residence you owned and lived in did not comply with local and state building codes, and new construction would have cost less to bring the original building up to standards and compliance.
- If the home you owned was not a permanently affixed to a foundation, as in the cases of RV’s and some mobile homes, you are also a First-Time Home Buyer.
- Additionally, if you haven’t owned a home for at least 2 years prior to purchasing a new home, for the purposes of a penalty-free IRA Withdrawal, you meet the requirements of a First-Time Home Buyer.
- For some mortgage programs, if you haven’t owned a home in the past 3 years, you may qualify as a First-Time Home Buyer. (Check the details of specific mortgage programs with your lender or realtor.)
For Different Reasons and Programs
In the case of an IRA Withdraw, you can withdraw up to $10,000.000 from your IRA. This is to purchase a home even if you’re not 59.5 years of age. This purchase does not need to be a traditional home. You will have to pay income taxes on the withdrawal.
Mortgage programs that offer preferred terms to First-Time Home Buyers are:
• FHA Loans for qualified military personnel, veterans, and spouses.
• United States Department of Agriculture (USDA) Home buyers assistance Program for homes in certain rural areas.
• Good Neighbor Next Door was originally called the Teacher Next Door Program. It was expanded to include Law Enforcement, Firefighters, and Emergency Medical Technicians. This is a HUD sponsored program which allows a 50% discount on the list price of homes located in certain revitalization areas:
Home Upgrade Programs
HUD 203(k) loans
Fannie Mae and Freddie Mac.