According to consumer research conducted by Fannie Mae, the primary barrier to homeownership for first-time homebuyers is saving money for the down payment and closing costs. So, Fannie Mae and Freddie Mac have developed programs to help first-time homebuyers achieve the goal of home ownership. These programs allow as little as 3% down and, if you meet income limits, better pricing for the interest rate and mortgage insurance.
Who is a first-time homebuyer?
- You must intend to reside in the house you are buying.
- Have no ownership in a residential property for three years preceding this purchase.
- Have left a marriage, and the only ownership in a residential property in the last three years has been the home owned with the spouse.
Also, if you are buying a house with another person and will both live there, only one borrower must be a first-time homebuyer to use these programs.
Short on Cash
This expanded definition of first-time homebuyers opens up this program to more people. Last week, I talked to a woman who was separating from her spouse and needed to buy a home for herself and her children. She had little cash to put into this new home because most of their wealth was tied up in the marital home and retirement accounts. Fortunately, she will qualify for these programs.
First-time Homebuyer After a Divorce
I also had a client last year who had gotten divorced several years ago. They sold the marital home, and she decided to rent to test out where she wanted to live and what type of housing would work best for her in her new life. Since it had been three years since she owned, she qualifies as buying a home for a first time. Consequently, she able to take advantage of these programs.
Please get in touch with me if you want to learn more about these programs.