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First time home buyer definition

Home buyers standing in front of their new homeAccording to the Department of Housing and Urban Development, the definition of a first time home buyer is an individual who meets any one of the following five conditions:

  1. An individual who has had no ownership in a principal residence during the 3-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).
  2. An individual who is a displaced homemaker and has only owned with a spouse.
  3. A single parent who has only owned with a former spouse while married.
  4. 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.
  5. An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.

Rotating question markHome Buyer Frequently Asked Questions

Q. What are first time home buyer programs?
A. There are numerous loan programs for first time home buyers. Some first time home buyer programs provide down payment assistance or money for the closing costs. The HomeReady mortgage program is an exceptional first time home buyer program. The down payment requirement is only 3%.

Many HUD housing agencies can lead first time home buyers to special loan programs. The Federal Banks also provide funding for first time home buyers.

Q. What should a first time home buyer know?
A. First time home buyers should read 10 first time home buyer tips

  • Get your free credit report!
  • Get your papers in order!
  • Get PRE APPROVED - not PRE QUALIFIED
  • Find a lender who uses the rapid rescore program in conjunction with a credit simulator.
  • Get an estimate of the closing costs before making an offer

Q. What are the benefits of being a first time home buyer?
A. First time home buyers are usually eligible for a discounted interest rate, down payment or reduced closing costs.

Q. What is a first time home buyer grant?
A. Many state and county governments offer grants to first time home buyers to encourage homeownership. As mentioned earlier, even the Federal Home loan banks offers grant money. Some grant programs will pick up the closing costs and/or down payment and cover the cost with a second, forgivable mortgage.

Q. Can a seller refuse to pay closing costs?
A. Sellers are not required to pay closing costs, but lenders and even the real estate agent is permitted to pay a percentage of the closing costs. Ask them. What's the worst thing that could happen?

Q. Can I get a mortgage with a 550 credit score?
A. The FHA loan program will allow a credit score as low as 500, with a 10% down payment. The threshold is 580 for the minimum down payment of 3.5%

Q. Can you be denied a FHA loan?
A. You can be denied an FHA loan and any other loan for that matter. Insufficient income, time on the job, lack of cash savings and unsatisfactory credit can be a cause for denial.

Q. Do first time buyers pay closing costs?
A. Of course first time home buyers pay closing costs, and down payment, but, qualified first time home buyers may be eligible for special financing.

Q. How can I avoid closing costs?
A. You can't, but a cooperative seller is permitted to pay a percentage of the closing costs. See seller assist

Q. How fast does your credit score go up after paying debt?
A. Do you know about the rapid rescore program? Rapid rescore can update the credit score in as little as 5 days. Read more about rapid rescore