I talk to a lot of clients about first time homebuyer programs. There can be many benefits if you are a first time homebuyer from reduced rates to down payment assistance. But how do you qualify for these programs? What makes you a first time homebuyer? Did you know that if you have owned a home in the past, you may still be considered a first time homebuyer?
In the mortgage world, a first time homebuyer is someone that has not owned a home in the past three years. So if you owned a home 5 or 10 years ago, sold it, and now are looking to buy again, you are considered a first time homebuyer.
What are some of the benefits to being a first time homebuyer? Depending on your income, you may qualify for lower interest rates, lower mortgage insurance if it’s required and there are down payment assistance programs and grants available in certain areas. Most require that your income is under median income limits and those vary by area. In Minnesota, you may be able to qualify for MN Housing’s program which can give you up to $11,000 in down payment assistance that you do not need to pay back until you sell your home or pay off your mortgage. If you are over the income limits for the $11,000, you can get up to $17,000 in down payment assistance but you need to pay it back over the first 10 years of your mortgage. Even better is if you have owned a home recently, you may still be able to qualify for the $17,000 in down payment assistance.
There are other programs geared towards first time homebuyers that vary by area. In Minnesota, there are several county programs and also city programs. If you think you may qualify, it’s definitely worth looking into the area you are buying in to see what may be available.
Fannie Mae and Freddie Mac both have programs geared to first time homebuyers, but they also allow anyone under the income limit to use the program – you need to be at 80% of the area median income limit. In the Minneapolis/St Paul area, that is $82,240. This program allows you to put as little as 3% down and get a reduced mortgage insurance premium and usually a slightly lower interest rate.
If you think you may qualify for a first time homebuyer program, talk to your loan officer. If they don’t offer special programs, you may want to check with another lender just to make sure you are getting the best program for you!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
