First-Time Home Buyer Benefits: How to Qualify

You may qualify as a first-time home buyer if you haven't owned your principal residence in the past three years.
Abby Badach Doyle
By Abby Badach Doyle 
Updated
Edited by Johanna Arnone Reviewed by Michelle Blackford
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Weird but true: Qualifying as a first-time home buyer doesn't mean you've never owned a house. First-time home buyer perks, such as low down payment loans or closing cost assistance, can be worth a lot of money, so it pays to know if you qualify.

First, do some digging. Many groups offer benefits for first-time home buyers at local, state and national levels. Then, look into the specifics. Each group sets its own qualifications. In many cases, you can qualify as a first-time home buyer if you haven’t owned your principal residence in the past three years.

Just starting your research? Here’s your how-to guide.

When are you considered a first-time home buyer?

You are typically considered eligible to apply for first-time home buyer loans and benefits if you haven't owned your principal residence within the past three years. In general, you could be considered a first-time home buyer if:

  • You’ve never owned a home.

  • You’ve previously owned a home, but for the past three years (or more), you’ve been renting or living in a place someone else owns.

  • You owned a home with a spouse but now are buying a home on your own.

Some first-time home buyer assistance programs are even more lenient, offering financial aid in specific areas targeted for redevelopment, even to repeat buyers.

If you’re not sure where to start, lean on your homebuying squad. Ask your financial advisor or housing counselor to recommend programs you might qualify for. Your real estate agent or mortgage loan officer might have suggestions, too.

🤓Nerdy Tip

Many programs are run at the state or local level. Check out NerdWallet’s list of first-time home buyer programs by state to see what’s available near you.

Who offers first-time home buyer assistance?

Many groups offer benefits and programs for first-time home buyers. They include:

  • State governments, including housing finance agencies (HFAs).

  • Local governments, such as housing and community development authorities.

  • Nonprofit organizations.

  • Banks, credit unions and other mortgage lenders.

  • Some employers (check with your benefits department or labor union). 

Each group has its own menu of offerings, so shop around. You might be eligible for certain first-time home buyer programs but not others.

First-time home buyer benefits and programs

Common benefits and programs for first-time home buyers include:

  • Low- or no-down-payment mortgages.

  • Down payment assistance.

  • Closing cost assistance.

  • Federal tax credits, such as a mortgage credit certificate (MCC).

Did you know...

Not all down payment and closing cost assistance is the same. Sometimes, the money is a grant that you don’t have to pay back. Other times, the funds have to be repaid as a low- or no-interest loan. Some loans are forgivable once you stay in the home a certain number of years.

If you qualify for multiple grants or programs, see if you can combine them to help stretch your dollar to afford your first home.

How to qualify for first-time home buyer benefits

Approval standards vary by program and location. For example, some first-time home buyer programs might have rules that limit a buyer’s income or the purchase price of the home. Other homebuying assistance programs, such as Good Neighbor Next Door, are designed for those in helping professions like teachers, emergency responders and law enforcement officers.

You might be required to complete a first-time home buyer class to qualify for a grant, loan or down payment/closing cost assistance. These classes are designed to help you navigate the homebuying process and can be a good idea to take whether they're mandatory or not.

Many mortgage lenders offer some type of first-time home buyer loan program. However, if you're looking to snag a loan tied to assistance provided by a local or state housing agency, you'll need to use an agency-authorized lender.

Look for an approved-lenders list on your state housing agency's website.

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