First-Time Homebuyer Requirements & Benefits: What You Should Know

Buying your first home is a monumental moment marking the beginning of life-long memories, but for many, that dream may seem out of reach due to the monumental cost of buying a house. Luckily, first-time homebuyers can often qualify for financial assistance, making a home purchase a plausible reality. It’s even possible for previous homeowners to qualify for first-time homebuyer benefits under special circumstances. That brings up two million-dollar questions: Who qualifies as a first-time homebuyer and what are the requirements?

Keep reading to discover the answers to those questions, the benefits available to first-time buyers, and the best time to buy your first home. Let’s dive in!

Who Qualifies as a First-Time Homebuyer?

The classic definition of a first-time homebuyer is someone who has never purchased a home. However, previous homeowners can also qualify as first-time buyers. Former homeowners experiencing extenuating circumstances can claim “first-time homebuyer” status and all the benefits that come with it.

Here are previous homeowners that may qualify as a first-time buyer status: 

• Single parents: You owned a home with your former spouse. You are eligible even if your name was on the deed and mortgage.
  
• Family caregivers: You left your job to care for a family member (without pay).
  
• Gap years: It has been at least three years since you’ve owned a primary residence.
  
• Mobile homeowners: Your primary residence is not permanently attached to the foundation.
  
• Homeowners with damaged properties: Your home is deemed structurally unsafe and the repair costs exceed the home’s value. 

First-Time Homebuyer Eligibility Requirements

Buyers must also meet certain eligibility requirements to gain access to these benefits. The following requirements are a general guide and may vary by each state.

• A minimum credit score between 620-680, depending on the program
• Three percent to 3.5% down payment, depending on the loan program
• Forty-three percent or lower debt-to-income ratio (DTI) 
• Two consecutive years of employment and consistent income 

Top 5 Benefits for First-Time Homebuyers

First-time homebuyers are eligible for financial assistance and benefits that enable them to achieve the ultimate dream of owning a home. The assistance, often referred to as first-time homebuyer programs, provides simple solutions to homeownership through down-payment assistance programs, affordable mortgage rates programs, grants and more. Learn about a handful of these programs below:

1. Down Payment Assistance: Federal organizations such as Fannie Mae, Housing and Urban Development (HUD), and the Federal Housing Administration (FHA) provide down payment assistance to qualifying first-time homebuyers. Some well-known programs include Fannie Mae’s HomeReady® Mortgage and FHA loans. Many programs offer down payments as low as 3%.      
    
2. Homebuyer Grant: First-time homebuyer grants award cash to the buyer at the time of purchase. Those who qualify do not have to pay back the grant. Banks, mortgage lenders, non-profits and government agencies provide funds that cover (or partially cover) your down payment or closing costs while offering loan forgiveness. Other grants may offer zero-interest loans or deferred payment loans.   
   
   
3. Closing Costs Assistance: Closing costs typically range between three to six percent of a home loan amount resulting in thousands of dollars required upfront. Federal organizations, state/local programs and non-profits offer reduced or forgivable closing costs, easing your transition into homeownership.
    
   
4. Tax Deductions or Tax Credit: All homeowners receive welcomed tax benefits, but first-time homebuyers are eligible for exclusive tax deductions or tax credits, including Mortgage Credit Certificates (MCCs). An MCC tax credit enables first-time homebuyers to offset their mortgage interest. This benefit gets you closer to paying off your home rather than just your interest. 
   
   
5. Homebuyer Education Course: Various programs offer (and may require) homeowner education courses that educate buyers on topics including important terminology, homebuying benefits and costs associated with buying a home. These courses help you thrive and plan accordingly when it comes to the largest purchase one can make in a lifetime.

Knowledge is power when choosing the best loan or assistance program. Once you qualify for first-time homebuyer benefits, you must determine the best financial programs for your situation. Your choice about financing your home can affect your budget and future finances. Understand your new home financing options and choose the right path for you!

When to Buy Your First Home

Here are a few tips for first-time homebuyers to better understand when to purchase a home. First-time buyers often overlook essential details before buying a home, essential details like:

1. Do you have a monthly budget? 
2. Are you aware of the additional annual costs associated with homeownership?
3. Have you been pre-qualified? 
4. What is the total cost of owning a home?

Whether you need to comprehend the intricacies of real estate transactions, identify the perfect house that suits your style and budget, or secure a suitable mortgage loan, there are other valuable insights you should know before buying your first home.

First-Time Homebuyer Benefits Are the Key

Purchasing a home can feel like a distant dream, but with the help of first-time homebuyer financial assistance, owning a home could be a reality sooner than you might think. First-time homebuyer programs, like down-payment assistance and homebuyer grants, help to equal the playing field so that everyone has a chance at this lifetime achievement. But remember, it’s crucial to do your diligence researching which assistance is right for you (and what you’re qualified for), plus thoughtfully planning your finances to be sure you can afford all of the costs that come along with buying a home.

Here at Century Communities, we offer a variety of homes from single-family homes to townhomes, paired homes and condos in 18 states and over 45 markets across the U.S. Our hands-on process—uniquely tailored to your needs and lifestyle—provides first-time homebuyers like yourself the guidance and attention you deserve. 

Start your new home search today!