Hi My Name is: First Time Home Buyer.

Shopping for a mortgage as a first-time buyer can be both exciting and overwhelming. While some of the offers provided are craftily designed marketing messages from lenders that are “too good to be true,” there are legitimate programs to aid buyers who may otherwise have difficulty finding financing at affordable rates, or qualifying for a home mortgage as first-time buyers. As you sort through the mass of information, it is critical to have a clear understanding of what it means to be a first-time buyer, as well as the differences between financial assistance programs, loan programs, and clever mortgage lender marketing.

Exceptions and Conditions

It is important to note that being a first-time buyer doesn’t mean you have never purchased a home, although that criteria certainly applies. In fact, based on the conditions outlined below, for lending purposes, you may actually qualify as a first-time home buyer more than once:

• Single parents who have only owned a home with their previous spouse while they were married

• Owner of a primary residence such as a mobile home that wasn’t attached to a permanent foundation (additional regulations may apply)

• Homemakers who have since been displaced after ownership of a home with former spouse

• Owner of a condemned property, or one that failed to meet local building code ordinances, and would cost more to meet code than to construct a new residence

• Individual or spouse who hasn’t owned a primary residence in the last three years (Married couples may qualify if at least one of them meets this condition.)

Types of Programs

Generally, programs geared toward first-time home buyers are broadly categorized as either financial assistance or loan programs, both of which can be helpful. Financial assistance programs for first-time home buyers generally come from local and state government entities, with the federal government stepping in to provide additional help in times of economic hardship.

Loan programs, including those backed by the Federal Housing Administration (FHA) have features that are especially attractive to borrowers with little to no cash savings on hand, or low credit scores, and are available to borrowers of all backgrounds through a variety of commercial lenders. For buyers with better credit, and a little more cash on hand to use for a down payment, private lenders may also offer loan rates and terms that first-time buyers might find attractive.

While the decision to go with a loan program or financial assistance program is up to the buyer, it is well-advised to determine your eligibility as a first time buyer, and to consider the pros and cons of each program before making a final decision.

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