How to Qualify for First-Time Home Buyer Programs

Are you a first-time home buyer? Welcome to one of the most rewarding experiences of your life! And, let’s be honest, one of the most up-and-down, roller-coaster rides you will ever experience. Buying a home is stressful, and it is a significant investment. Fortunately, though, there are programs designed just for you. What do you need to know about qualifying for first-time home buyer programs?

6 Tips on Qualifying for First-Time Home Buyer Programs 

When it comes to first-time buyer programs, some of the biggest opportunities include:

1. FHA. The Federal Housing Administration offers loans with lower down payment and credit score requirements. For example, a conventional lender often requires a score of at least 700 and a 20% down payment. FHA loan requirements are different: you can get financing with a score of 580 and a down payment of as little as 3.5% (or credit score of 500 with a 10% down payment). You will need to pay mortgage insurance if your down payment is less than 20%, but if you cannot secure a traditional mortgage, this is one way to become a homeowner.
2. FHA Section 203(k) Rehab. This program, also from the FHA, rolls purchase costs and rehabilitation costs into one single mortgage. If you are looking to purchase an older “fixer upper,” this can be a huge help. There is no minimum or maximum income requirement.
3. State and Local Grants. Local programs can offer incentives. For example, the City of Fort Lauderdale, Florida has a Housing Choice Voucher Homeownership Option. First-time buyers can get monthly assistance if they purchase rather than rent. Look into your area’s programs. You might be surprised by what you can find in your neighborhood or region.
4. USDA. This is a loan program that is 100% backed by the US Department of Agriculture and designed for low- to moderate-income folks looking to purchase a home in a USDA-eligible rural area. It is possible to get 100% financing, but you will need a credit score of 640 or higher to qualify. If yours is a bit lower, you may be able to provide extra documentation on payment history to qualify.
5. VA. Active duty military members, vets, and their spouses can get financing that is backed by the VA. They have lower interest rates, and you won’t need to make a down payment or pay mortgage insurance. A credit score of 580 - 660 is required. There is a funding fee, but you can roll this into your monthly mortgage payment.
6. Good Neighbor Next Door. Calling all full-time law enforcement officers, firefighters, EMTs, and Pre-K through 12th grade teachers. This program offers these folks a 50% discount off the purchase price of homes in identified “revitalization areas.”

Each program has different eligibility requirements. Some, like the Good Neighbor Next Door and VA incentives, do not have income limits, while others state that you cannot make more than a set amount (e.g., 100% of the area’s median income). Others do not have an income limit but do have minimum credit score requirements. Take a look at each and see which programs align with your income, credit score, and needs. And be sure to keep an eye on the current mortgage rates.

Do I Have to Be a 'First' Time Home Buyer to Qualify for First-Time Home Buyer Programs?

Seems like a silly question, doesn’t it?! But here’s why it’s not: you do not necessarily have to be buying your first home ever to qualify for these programs. The FHA and others consider you a “first-time buyer” if you have not owned property in the past three years. So, if you bought a house in 2010, sold it in 2017, and are looking to buy in 2021, congratulations: you are a first-time buyer. 

First-time home buyers have a variety of different options to explore. Programs exist for folks with lower incomes and/or lower credit scores, those with specific professional backgrounds (e.g., military, law enforcement, teachers, etc.), and those purchasing in specific areas (e.g., revitalization zones and eligible rural areas). It is well worth investigating in programs you might be eligible for - it can save you thousands of dollars and help you realize your dream of owning a home.

Visit Homes & Land to start your home search. You can access a ton of helpful resources, and when you’re ready, find a real estate professional who can help you navigate the homebuying process whether you're a first timer or a 'first' timer.