One of the most exciting and expensive purchases you’ll ever make is buying your first home. This is a major milestone for everyone, as it allows you to grow your roots and build a community. However, there’s a lot that goes into buying a house for the first time.
From learning what a down payment is, to finding a realtor to trust, this experience can be overwhelming if you’re not prepared. In this first-time home buyer guide, we’ll cover everything you need to know, including the advantages of buying your first home and the steps required.
Advantages of Being a First-Time Home Buyer
If you’re buying your first home, it’s important to know that there are several advantages to take note of. Many state and federal programs are designed to help make purchasing a home for the first time possible with limited finances on hand. Some of the benefits you may qualify for, depending on your state and circumstances, include:
Down payment assistance: Most people don’t pay for their homes upfront. However, it’s often required to pay a down payment in order to get the keys, which can still cost thousands of dollars. To help offset this, some state and federal programs provide down payment assistance to first-time home buyers. To qualify, contact your local or state housing authority.
First-time home buyer grants: These buyer grants are often loans that don’t need to be repaid and are offered to low to mid-income borrowers who apply through their state's first-time home buyer program.
No down payment loans: While most conventional loans require a down payment, some qualifying buyers may be able to secure a loan that doesn’t require a down payment.
Tax breaks: Many people are also eligible for tax breaks, such as the first-time home buyer tax credit.
These are just some of the helpful benefits available to those interested in buying a home for the first time. Work with your state or local housing authority to see what benefits you may be eligible for, or review our financing page to see if you qualify.
Special Programs for First-Time Home Buyers
As you now know, there are several advantages and benefits to being a first-time home buyer. Below is a list of some of the state, local, and federal programs aimed at assisting buyers in purchasing their first home:
VA Loans: If you’re a qualifying U.S. military member, such as a veteran, active duty, or eligible family member, you may be eligible for a home loan backed by the U.S. Department of Veteran Affairs that comes with lower interest rates and no down payment.
USDA Loans: If you’re purchasing your first home in a rural area, you may be eligible for a loan backed by the U.S. Department of Agriculture that can offer up to 100% in financing and no down payment.
FHA Loans: The Federal Housing Administration insures FHA loans, which come with favorable terms for first-time home buyers, such as a low minimum credit score and low down payment.
Good Neighbor Next Door Program: The U.S. Department of Housing and Urban Development (HUD) has the Good Neighbor Next Door Program, which offers housing aid to qualifying teachers, firefighters, law enforcement officers, and emergency medical technicians.
HomePath Ready Buyer Program: The HomePath Ready Buyer Program offered by Fannie Mae is aimed toward first-time home buyers interested in purchasing a foreclosed home. Requirements include taking a homeownership course through Fannie Mae, where they can then receive up to 3% in closing cost assistance when buying a HomePath property.
Additionally, it’s important to note that every state has its own first-time home buyer programs. These can be found on each state’s housing authority websites. Examples of these programs include down payment grants or assistance, homebuyer grants, and low-interest mortgage programs.
Qualifications of First-Time Home Buyer Programs
There are dozens of first-time home buyer programs, and each one has its own qualifications. With that said, you will need to research or consult with your realtor or mortgage lender about the eligibility requirements for specific programs.
For example, in order to qualify for a VA loan, you will have to be an active military member, veteran, or eligible spouse. For an FHA loan, you will need a minimum credit score of 580 to give a 3.5% down payment, a debt-to-income ratio of less than 43%, and a mortgage insurance premium.
However, HUD set a definition of a first-time home buyer to help lenders identify them. Their definition goes as follows:
A buyer who hasn’t owned a principal residence for three years.
If one spouse hasn’t owned a home, both will qualify as first-time home buyers.
A single parent who has only owned a house with a former spouse while married.
A prospective homeowner who was displaced and only owned a home with a spouse.
A person who has only owned a primary residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
A person who has only ever owned a property that didn't adhere to state, local, or model building codes and that couldn't be brought into compliance without costing more than constructing a permanent structure.
Limitations & Regulation Changes 2022
In order to make homes more affordable to first-time home buyers, HUD made changes in 2022 that prevent large investors from bidding on “foreclosed formerly FHA-insured properties.” These changes were made to help low- to mid-income buyers become homeowners. The limitations create exclusive periods where only Owner-Occupied Buyers, HUD-approved Nonprofits, and Governmental Entities can bid on them. Click here to view our Buyer Exclusive properties available.
View Our List of Homes for Sale
Was our first-time home buyer guide helpful? If so, turn to ServiceLink Auction to help you find your first home. In addition to guides and resources like how to bid on a home, you can find foreclosures, newly foreclosed, bank-owned, and our buyer exclusive on our platform. Browse our list of homes for sale today.