Defining first-time homebuyer
Get ready, we have a HUGE mortgage-related "did you know":
You don't have to be buying for the first time to qualify as a first-time homebuyer.
First-time homebuyer is defined a few ways, which means even if you have owned a house before, you may still qualify for the list of first-time benefits you've seen advertised (or, if you're thinking, wait, what first-time benefits!?, keep reading or reach out to a loan officer and they'll be happy to fill you in).
Here's what first-time homebuyer could mean in mortgage world.
Three years of non-homeownership
Fannie Mae, one of the big three government-backed mortgage investors (and mortgage standard-setters), defines first-time homebuyer as a mortgage loan applicant who fits all of the following three descriptions:
(1) purchasing the security property,
(2) residing in the security property as a principal residence, and
(3) had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property.
In simpler terms, this means if you're buying a property you plan to make your primary residence AND have not owned a residential property in the three years before this purchase, you may qualify as a first-time homebuyer.
If your current home isn't really "yours"
Fannie Mae adds that an individual who is a displaced homemaker or single parent may be considered a first-time home buyer if he or she had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period.
In other words, you may have lived in a home with your spouse or partner for the previous three years, but if your name was not part of that mortgage contract, or it was on the contract only as a joint owner with your spouse, Fannie Mae may qualify you as a first-time homebuyer.
You've fulfilled the waiting period after short-sale or foreclosure
For anyone who has been through a short sale or foreclosure, you may qualify as a first-time homebuyer if you have fulfilled the waiting period required by the mortgage lender.
Sometimes it's the typical three-year period we already discussed, and sometimes it's longer – anywhere from 4-7 years is common. This time frame depends on what the lender has decided according to the guidelines of government entities backing the loan such as the Federal Housing Administration, Fannie Mae or Freddie Mac.
About those first-time homebuyer perks
Now that you know you may actually qualify as a first-time homebuyer even if it's not technically your first time being a homeowner, you may have a greater interest in how your newfound status could benefit you.
As a first-time homebuyer, you may have access to loan programs only offered to first-time buyers that have special no or low down payment options, programs that include down payment assistance or that offer more flexibility when it comes to closing costs. Plus, there may be potential tax breaks the year following your home purchase* if you fit into this homeownership group.
To learn more about qualifying as a first-time homebuyer, what benefits are available and if this could give you a home buying advantage, talk to a mortgage professional in your area.
*check with a tax professional
