What is a first-time homebuyer? Surprisingly, the definition isn’t as simple as it seems. According to the Federal Housing Authority (FHA), a division of the U.S. Department of Housing and Urban Development (HUD), a first-time homebuyer is defined as any individual who meets any of the following criteria:
- An individual who has had no ownership in a principal residence during the three-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers).
- A single parent who has only owned with a former spouse while married.
- An individual who is a displaced homemaker and has only owned with a spouse.
- An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
- An individual who has only owned a property that was not in compliance with state, local or model building codes, and which cannot be brought into compliance for less than the cost of constructing a permanent structure.
History and Origins
There are many reasons someone may want to purchase a home. They may be tired of renting, ready to set down roots in a community, make an investment or want to make a space all their own. Whatever the reason, in the current “buyers’ market,” first-time homebuyers are increasingly ready to take that first step toward homeownership and are often looking for guidance on how to make it happen.
Like learning anything new, the process can seem intimidating. Fortunately, there are many resources geared towards first time home buyers to facilitate their journey and help make home ownership a reality.
Real Life Applications
After a potential buyer decides the time is right to purchase a first home, a learning period begins to find out more about the process and costs involved. This includes everything from managing their budget, finding out their credit score, and shopping for a lender, real estate agent, and insurance company.
To help first-time homebuyers, many lending institutions have increased their role as advisors, offering many options to help secure loans with lower payments or assist with down payments. If you’re thinking about buying your first home, these options can relieve some of the stress and financial fears associated with purchasing your first property.
The Last Word
Becoming a first-time home owner can be an exciting step in your life journey, allowing you to find a place that suits your lifestyle, build credit, receive tax benefits and invest in your future. Be sure to ask your lender what education and counseling programs are available in your area as a first-time homebuyer and choose the best financing option to meet your needs.