What to Know About Being a First-Time Home Buyer

May 28, 2021

Why is it so important to know your mortgage loan options as a first time home buyer? Whether you are buying a home sold by the owner, or choosing to have your property built for you on your own lot using a One-Time Close construction loan, there may be advantages to being a first-time borrower.
 
There is a huge myth about certain types of home loan (FHA mortgages specifically) that prevents some people from considering FHA loans as an option--we’ll explore that myth below and why you should take note even if you have purchased a home before and want to do so again.

First-Time Home Buyers: Who Qualifies?

In some cases, first-time home buyer advantages are offered by the lender. In others, they are offered to state residents (such as local down payment assistance) who qualify for certain first-time home buyer programs.
 
And, believe it or not, some applicants don’t even know they are considered first-time home buyers. Does that sound confusing? It gets easier to understand when you know that for some home buying programs you are considered a first-time home buyer if you have not owned a home in the last three years.

Down Payment Assistance

That is an important factor to remember because if you qualify for a first-time home buyer program such as a down payment assistance grant or closing cost grant, a “silent second” second mortgage for closing costs, etc. you can save more money out of pocket up front on the home loan.

Many such programs make allowances for those who are buying homes for the first time in more than three years, or make allowances for those who are purchasing in certain qualifying areas, etc.

The FHA Loan Myth

Remember the myth about FHA home loans we mentioned above at the start of this article? It’s the prevailing, but definitely NOT TRUE idea that FHA home loans are only for first-time home buyers and no one else may qualify.

FHA loans, including FHA One-Time Close Construction loans that let you build on your own land, are NOT restricted to first-time borrowers or first-time home buyers. Any financially qualified applicant may be approved for an FHA mortgage.

But certain local home buyer grants or down payment assistance programs DO require you to be either a first-time buyer or be buying after a long absence from home ownership. And even a first time buyer should know that when applying for a construction loan, down payment assistance may not be allowed, first-time home buyer or not. These are all issues that are crucial to understand as you head into the planning stages for your mortgage loan.

------------------------------

Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we'll get you there in 9 steps.

Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner's Insurance
Step 9: What to Expect at Closing