First-time homebuyer qualifications

Key takeaways
- First-time homebuyers are those who have never owned a home or have not owned a home in the last three years.
- First-time buyers — especially those with low or moderate incomes — might qualify for a more affordable mortgage with down payment and closing cost assistance.
- If you want a first-time buyer loan or assistance, you’ll likely need to complete a homebuyer education course.
Eligible first-time homebuyers have access to a variety of mortgage and down payment assistance programs. Here’s how to know whether you qualify.
Did you know? Fifty percent (roughly 350,000) of Bankrate users are first-time homebuyers.
Source: Bankrate, 2024 Annual Data
Who qualifies as a first-time homebuyer?
The term “first-time homebuyer” can be misleading. Under many programs, you qualify as a first-time buyer if you’ve never owned a home before or haven’t in the last three years. You need not have never owned before to qualify.
You might also qualify as a first-time home buyer if you:
- Are a stay-at-home or single parent who jointly owned a marital home in the past three years with your spouse; or
- Have not solely owned a marital home or solely or jointly owned any investment or second properties.
First-time homebuyer vs. first-generation buyer
A first-generation homebuyer is someone whose parents or legal guardians never owned a home during the homebuyer’s lifetime. A first-time homebuyer is someone who either hasn’t owned a home or hasn’t in the past three years and doesn’t factor in generational homeownership. First-generation homebuyer programs are generally designed to target low-income households.
Other first-time homebuyer qualifications
The three-year requirement isn’t the only criteria you’ll need to meet to qualify for many first-time homebuyer assistance programs. Other requirements may include:
- At least a 620 credit score. Some programs require at least 640 or 680.
- 43 percent or lower debt-to-income (DTI) ratio
- A contribution toward a down payment, which varies depending on the loan program
- An income and a purchase price within program limits
- Buying a home in a specific city, county or state
- Completion of a homebuyer education course
What are the benefits of being a first-time buyer?
If you can qualify for an assistance program — which are often offered through states’ housing finance agencies — you’ll likely receive a series of benefits, such as:
- More affordable monthly payments: First-time homebuyer loans often have below-market mortgage rates and reduced rates on private mortgage insurance (PMI) — if it’s required at all. Saving money on these costs helps lower your monthly payment.
- Lower down payments: These loans may also include down payment assistance, or allow you to get help with your down payment from a third-party program. Some programs also provide funds for closing costs assistance.
- First-time homebuyer support: If you’re buying a home for the first time, many cities and counties offer first-time homebuyer support programs and education courses. These community organizations can also help you apply for grants and assistance programs.
Next steps for first-time buyers
If it’s your first time buying a home, you might be facing information overload or daunted by the search. Here’s what to focus on first:
- Examine your financial situation. Take a hard look at your credit score, DTI ratio, earnings and savings. Set a realistic budget for your home purchase, including the down payment and closing costs. The 28/36 rule is a good starting point.
- Do your homework. Find out what first-time buyer programs you qualify for. Many programs require borrowers to complete an education class, so get that task out of the way as early as possible. The good news: You might be able to complete this course online.
- Get preapproved for a mortgage. When you’re ready to start house-hunting, get preapproved for financing. This helps you understand how much a lender is willing to let you borrow, and it allows you to make offers on homes.
- Shop around. Rates, requirements and deals vary by mortgage lender, so it’s wise to shop around until you find your best fit. Read mortgage lender reviews and then narrow down your search to your top three before inquiring about what they can offer you.