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 a 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.