Who Qualifies as a First-Time Home Buyer? (6 Steps to Become a First-Time Buyer)

Are you looking to purchase your very first home? Most lenders and financial institutions will certify that you qualify as a first-time buyer if it has been at least three years since you last owned a place of residence. This will unlock an array of incredible benefits for those taking their initial steps into homeownership.

Let’s explore some of the best benefits and perks of being a first-time home buyer. As you’ll soon learn, it’s not just a chance to buy the house of your dreams but also an opportunity to save money on taxes and get other benefits, as well!

Who Qualifies as a First-Time Homebuyer?

The definition of a first-time homebuyer varies, but the consensus is that a first-time homebuyer is anyone who hasn’t owned a home in the past three years.

This definition applies to individuals as well as married couples. However, there are some exceptions to this rule. For example, if you are a single parent and have owned a home with a former spouse, you may still qualify as a first-time homebuyer.

The Benefits of Being a First-Time Homebuyer

As a first-time homebuyer, you are eligible for several benefits that can help make the home-buying process easier. These benefits include:

First-Time Homebuyer Tax Credits

In some cases, first-time homebuyers may be eligible for tax credits, which can significantly reduce their tax burden.

Down Payment Assistance Programs

Many states and local governments offer down payment assistance programs for first-time homebuyers. These programs can provide funds to help cover the down payment and closing costs.

Low Down Payment Mortgages

First-time homebuyers may also be eligible for low down payment mortgages, which can make it easier to purchase a home.

Special Loan Programs

There are special loan programs available for first-time homebuyers, including FHA loans and VA loans. These loans often have more relaxed credit requirements and lower down payment requirements.

How Does the IRS Define a First-Time Home Buyer?

Most people have heard the term “first-time home buyer”, but not everyone knows what it actually means. According to the IRS, a first-time home buyer is a person who hasn’t owned a house in three years.

That means you qualify as a first-time home buyer if you’ve never owned a home or if you have not owned a home in the last three years. It’s important to note that this three-year period does not need to be consecutive—if you owned a home four years ago and haven’t owned one since you could still qualify as a first-time home buyer.

Moreover, the IRS also defines any married couple who have not owned a home in the last three years as a first-time home buyer, even if one spouse has previously owned a primary residence.

Married Couples and First-Time Buyer Status

As long as one partner has not owned a home in the past three years, then both partners can qualify as first-time homebuyers in the US. So don’t worry if one of you has bought a home before.

If it was more than three years ago, you’re both good to go! Of course, you’ll still need to meet the other requirements for first-time homebuyers to get your hands on that dream house. Keep reading to find out what you need to do.

The 6 Steps to Becoming a First-Time Homebuyer

If you’re interested in taking advantage of the benefits offered to first-time homebuyers, it’s important to understand the process. Here are the steps you should take to become a first-time homebuyer:

1. Determine Your Budget

The first step in becoming a first-time homebuyer is to determine your budget. This will help you determine how much you can afford to spend on a home.

2. Get Pre-Approved

Before you begin your search for a home, it’s important to get pre-approval for a mortgage. This will give you an idea of how much you can borrow and what your monthly payments will be.

3. Shop Around for a Lender

Not all lenders are created equal, so it’s important to shop around for a lender that offers the best interest rates and terms.

4. Start Looking for a Home

Once you have your budget and pre-approval, it’s time to start looking for a home. Be sure to work with a real estate agent who has experience working with first-time homebuyers.

5. Make an Offer

Once you have found a home you like, it’s time to make an offer. Your real estate agent can help you with this process.

6. Close on Your Home

The final step in becoming a first-time homebuyer is to close on your home. This is when you will sign the necessary paperwork and pay any closing costs. Your real estate agent can help you with this process, as well.

Now that you understand the definition of a first-time home buyer and what it takes to become one, you’re one step closer to owning your dream home! Just remember to do your research and work with a real estate agent who has experience working with first-time homebuyers.

Conclusion

Purchasing your first home is an exciting yet intimidating experience. But don’t worry; with the right preparation, you can make it much simpler!

From understanding what qualifies as a first-time buyer to getting pre-approved for a loan and shopping around for the best lender, you’ll be able to turn your dream of owning a home into a reality in no time.

Featured Image Credit: Dragana Gordic, Shutterstock