Important takeouts:
First-time Home Buyer: Anyone who has not owned a major home in the past three years will be eligible for general first-time home buyer qualifications: credit score, debt return rate, down payment, income limit, employment history, purchase restrictions, home buyer education
Buy your first home? It’s an exciting time, but it’s important to understand your first homebuyer qualifications before you start dreaming of moving. These are important criteria that lenders and programs use to determine if you are eligible for funding, as well as special perks like down payment assistance.
This Redfin article will explain what you count as a first-time buyer, the qualifications you need to meet normally, and how you can get your finances for the purchase of a home. Whether you’re buying a home in Lincoln, CT or Hartford, CT, this guide will help you navigate the process with ease. Let’s get started.
In this article:
Do you qualify as a first-time home buyer? Additional Qualification Loans and Program Benefits of Being a First-Time Home Buyer What are the next steps? FAQ
Do you qualify as a first-time home buyer?
Simply put, first-time home buyers are those who have not owned a major home in the past three years. This is a standard definition, but there are other factors that allow you to qualify for the benefits of a first-time buyer.
You may also be eligible to be a first-time home buyer if:
I have never owned a home that I previously owned, but I have not shared ownership with my spouse for the past three years, but currently I have purchased a solo home that I have lived with my family, or have violated my local or state building code and have no mortgage in 3 years that I can’t bring into compliance
Eligibility for an additional first-time home buyer
First-time home buyer loans and programs have many other factors that can help you qualify.
Credit score
Credit scores above 620 are best suited for most programs and have a significant impact on eligibility and interest rates. Start by getting a credit report and challenging the error.
If you need to improve your score, focus on paying bills, paying off debts and avoiding new credits on time.
Debt to income ratio
Your debt-to-revenue ratio measures how much of your monthly income is paying for your debt. Most lenders prefer a debt income (DTI) ratio of less than 43%.
To assess DTI, lenders often use the 28/36 rule. First-time home buyers should not spend more than 28% of their income on housing expenses, and their total obligation should not exceed 36% of their annual income. To reduce the ratio, focus on repaying high profits and exploring options to increase your income, such as negotiating side jobs or pay raises.
>>Read: What percentage of your income should go towards your mortgage?
down payment
Many programs have down payment requirements. This varies from program to program, but a higher down payment can help you qualify for better terms and help you with eligibility. To save on your down payment, consider budgeting, automatic savings, and reducing unnecessary expenses.
Income limit
Some first-time home buyer programs have income limits. These are typically based on location, household size, and local median income (AMI). Please check the requirements for a specific program to see if you are eligible.
Employment history
Lenders usually look for two years of stable employment to verify income stability. You don’t need to be with the same employer, but employment gaps and frequent job changes may require explanations.
Purchase restrictions
Additionally, many programs have restrictions on home prices to ensure affordability. These vary by program and location, so it’s best to check program guidelines and lenders to see if they’re appropriate.
Home buyer education
Many first-time buyer programs require the completion of educational courses covering topics such as budgeting, credit, house hunting, and closing. Even if that’s not essential, home buyer education programs can be beneficial to new buyers and help them make informed decisions throughout their home buying journey.
Loans and Programs for First-time Buyers
Qualified Loan Down Payment Mynim Credit Score Key Credit Credit and Traditional Loansborough 3%% 620 Stoning Credit Credit with stable income, 3.5% reduction in stable income, low DTI ratio low credit score, and limited savings of 3.5% 580. 500 with 10% down Primary Residence, US Veterans, Service Members, Family Members Needed for Mortgage Insurance (Lenders prefer 620) Valid VA Certificate, 0% of the VA Certificate, Primary Residence, Non-Reliant on Mortgage Insurance, 0%620home Areas in Rural and Suburban Areas, 0%620home Areas in Rural and Suburban Areas Required for Mortgage Insurance. Borrower 3% 620 (homeeready); 660 (home potential) income limit, major residence, mortgage insurance If your first home buyer program is under 20%, first-time home buyers with limited income (various) are often combined with FHA or traditional.
>>Read: 6 types of mortgages for first-time buyers
Benefits of becoming a first-time home buyer
Professional loans and access to programs: Unlike repeat buyers, first-time home buyers are often eligible for mortgage products with more generous requirements. Supporting down payments and closing costs: While advance payment costs can be a major barrier, grants, loans and other programs can help cover these costs. Potential Tax Incentives: You may qualify for a mortgage interest deduction or a first-time home buyer tax credit. Opportunities to build equity and long-term wealth: Owning a home will help you build fairness over time and turn your monthly payments into long-term investments. Stability and predictable housing costs: Fixed-rate mortgages have consistent monthly home payments, unlike rent increases. HomeBuyer Education: Many first-time HomeBuyer programs offer free educational resources or courses you need, showing you the entire home viewing process.
What is the next step in qualifying?
Once you understand the basics of qualifying, start preparing. This is the important step:
1. Save down payment
Save savings to make your offers more attractive and reduce your monthly mortgage.
2. Check your credit score
Once reviewed, I will dispute any errors I find. If you still need to improve your credit score, pay all your bills on time and reduce your credit card debt and use.
3. Pay unpaid debts
Focus on paying your high profit balance and avoid taking on new debts. This shows your lender that you are a trustworthy borrower.
4. Building emergency savings
This will cover unexpected costs such as repairs, medical costs, and job changes, making it financially safe even after closing.
5. Prepare all the documents
Start collecting everything you need. This usually includes pay stubs, bank statements, tax returns, employment proof and identification.
6. Receive research loan options and pre-approval
Explore programs dedicated to first-time home buyers, including the traditional FHA and state-specific aid. Next, you will be approved in advance to understand what you can afford before searching the house.
7. Find a real estate agent
Real Estate Agents can help you navigate lists, schedule exhibits, negotiate offers, and guide your home viewing process with local expertise.
FAQ: First-time Home Buyer Qualifications
Can I qualify as a first-time home buyer multiple times?
Generally, no. There are several exceptions, including single parents and evacuated housewives, where previous owners may still qualify.
If you own an investment property, can you consider yourself a first-time home buyer?
yes. Unless you own a major residence in the last three years. The main residence is where you live most of the year and is usually tied to a legal address, not an investment property or holiday home, such as taxes, voter registration, or driver’s license.
What income do you need as a first-time home buyer?
There is no single income requirement to qualify as a first-time home buyer. It all depends on your local loan program and home prices. Some programs have income limits based on household size and median local income, while others are more flexible.
What if you have owned a house in the past with someone else?
If it wasn’t your primary residence, or if you are a co-signer and not the owner, you may still be eligible.
Does eligibility for first-time home buyers vary by state?
yes. Many state and local programs have their own eligibility requirements, income limits, and purchase price caps. These vary widely based on location, so check with your state housing finance agency or local lender for more information.
How do I find my first home buyer program?
Start by checking out your state or local housing finance agency. They frequently support down payment assistance, grants, or special loan programs for first-time buyers. You can also explore nationwide options such as FHA, VA, and USDA loans.
For a wide range of overviews, check out Redfin’s guide to your first HomeBuyer program, covering options available for each state and loan type.
