NextHome At The Lakes

Serving Okoboji and The Lakes Area Since 2016

The Advantages and Definition of the “First-Time Home Buyer”

Katie Slater
General

Just because you’ve owned a home before, that does not mean that you are automatically ineligible to be a first-time home buyer again.

Yes, it’s true! You are considered a first-time home buyer if:

  • You have never owned a home before OR
  • You have not owned a home within the past 3 years

Spouses are considered for eligibility individually so if your husband or wife has owned a home before- but you haven’t- or vice versa, you would also still qualify together as first-time home buyers.

Additionally- if you have owned a home without a permanent foundation such as a mobile home or RV in the past 3 years, you may still qualify and if you are a divorced parent who only owned a home with your divorced spouse, you may still qualify.

There are many advantages to first-time home buyers. Whereas conventional mortgage loans typically require aHome Buyers minimum down payment of 20%, consumers who qualify as first-time home buyers can take advantage of down payment assistance, an easier mortgage approval process, and tax advantages too!

One of the most popular loan products available for first-time home buyers is the FHA loan. An FHA loan is simply a mortgage that’s insured by the Federal Housing Administration or FHA.

FHA loans might be desirable to borrows who:

  • Have little or no down payment saved
  • Have a less than perfect credit score
  • Have a modest income
  • Have filed for bankruptcy within the past 4 years

Borrowers with a credit score of 580 or above can take advantage of a minimum down payment requirement of just 3.5%- which can even be gifted by a family member.

Borrowers with a credit score between 500-579 are not ineligible for an FHA loan, however they must pay 10% down.

FHA loans additionally require:

  • United States citizenship
  • Steady employment/reliable source of income
  • A borrower’s satisfactory debt to income ratio
  • A home’s condition meet certain livability standards

Another advantage available to first-time home buyers is the “First-Time Home Buyer Savings Account Program”, which offers tax advantages to those wishing to save money for the down payment and closing costs on a future home purchase in Iowa.

Read more here about Iowa’s First-Time Home Buyer Savings Program.