If you've never owned a home, you are considered a first-time homebuyer. But you are allowed to be a previous homeowner and still qualify as a first-time homebuyer. According to the FHA, you can do so if you have not been an owner in a primary residence for at least three years leading up to your purchase.
The Federal Housing Administration has provided government insurance for home mortgage loans since the Great Depression in the 1930s. While FHA-insured loans are not exclusively for first-time homebuyers, they are popular with this demographic thanks to the favorable terms provided by lenders. The FHA has a clear definition of "first-time homebuyer," and lenders must use this during the underwriting process.
Previous Home Ownership
One of the FHA's primary criteria is whether or not you previously owned a home. If you've never owned a home, you are considered a first-time homebuyer. But you are allowed to be a previous homeowner and still qualify as a first-time homebuyer. According to the FHA, you can do so if you have not been an owner in a primary residence for at least three years leading up to your purchase. In this case, you and a spouse are treated separately. If you have owned a home but your spouse has not, then you can buy a home together as first-time homebuyers.
Effect of Divorce
If you divorce your current spouse or become displaced from your spouse in any way, you could be a first-time homebuyer in the FHA's eyes. However, to be considered, the only primary residence you have ever owned must be with your ex-spouse. In addition, you must be a parent.
The FHA allows you to be considered a first-time homebuyer, even if you've owned a primary residence within three years of your purchase, if your primary residence has not been permanently attached to anything, like a foundation. This means that if you have been living in a mobile home or RV, you should qualify as a first-time homebuyer.
If you have owned just one piece of property and it has sustained damage, you can qualify as a first-time homebuyer under two conditions. First, the damaged property must not measure up to local and state building codes. Second, the cost to fix the property must be more than it would cost to build a new property. Under these conditions, you qualify as a first-time homebuyer.
Other Program Eligibility Requirements
Bear in mind that the FHA is not exclusively for first-time buyers. Rather, it works in conjunction with other programs that are reserved for first-time buyers such as the programs provided by the California Housing Finance Agency. Lenders have their own eligibility requirements such as income and credit score requirements in addition to the stipulation that you are a first-time homebuyer.
Written by M.C. Postins; Updated June 20, 2017
Questions? Call us at (310) 467-8042 or michel@BronRealtyGroup.com