Do You Count as a First-Time Homebuyer? You Might, Even If You've Owned Before
Plenty of people assume "first-time homebuyer" means someone who has never owned a home. For many programs, that isn't quite how it works. A buyer who owned a home years ago, sold it and has been renting since may count as a first-time homebuyer again.
The catch is that there is no single definition. Each program, agency or lender can set its own. This guide walks through the definition many programs use, the common exceptions, how programs differ and how to check where you stand. Details vary by program and can change, so treat this as a starting point, not a final answer.
The Definition Many Programs Use
Many homebuyer programs use a definition modeled on the one HUD uses for some of its housing programs. In plain terms, you're often considered a first-time homebuyer if you have not had an ownership interest in a principal residence during the 3 years before the purchase.
A few words in that definition do a lot of work:
- Ownership interest. This generally means your name was on the title, not just that you lived in a home someone else owned. Living with a relative or partner who owned the home typically doesn't count as ownership on your part.
- Principal residence. This usually means the home you lived in as your main home. Under many definitions, owning a rental property or a vacation home you didn't live in may not count against you, though some programs look at any ownership at all.
- The look-back period. Many programs count back 3 years from the purchase date. Some programs use a different period or a different starting point. Check the exact wording for the program you're considering.
Because programs write their own rules, two programs in the same state can reach different answers for the same buyer.
You Might Count Even If You've Owned Before
This is the part that surprises many buyers. Under definitions with a 3-year look-back, prior ownership doesn't automatically rule you out. If you sold a home and haven't owned a principal residence since, you may meet the definition again once enough time has passed.
A few situations where it's worth checking rather than assuming:
- You sold a home several years ago and have rented since
- You owned a home with a former spouse and are now buying on your own
- You owned a home that wasn't on a permanent foundation
- You own a property but haven't lived in it as your main home
None of these is a guarantee. Each one depends on the program's exact wording and on your documents.
Prior ownership doesn't automatically rule you out. Check the exact definition for the program you're considering.
Exceptions Under Some Definitions
Some definitions, including HUD-style definitions used by a number of programs, add exceptions for specific situations. Not every program includes them, and the wording varies. Exceptions that appear in some definitions include:
- Single parent. Some definitions treat a single parent who has only owned a home with a former spouse while married as a first-time homebuyer.
- Displaced homemaker. Some definitions include a person who has only owned a home with a spouse and who worked mainly in the home rather than in paid employment. Programs that use this term define it in their own rules.
- Home not on a permanent foundation. Some definitions don't count prior ownership of a residence that wasn't permanently affixed to a permanent foundation under applicable rules.
- Property not up to code. Some definitions don't count prior ownership of a property that wasn't in compliance with state or local building codes and couldn't be brought into compliance for less than the cost of building a permanent structure.
If one of these sounds like your situation, ask the program administrator or a licensed loan officer how that program applies it. Programs may ask for documents, such as divorce papers or property records, to confirm an exception.
How Programs Differ
Being a first-time homebuyer matters only when a specific program requires it. Many loan programs don't.
Loans that aren't first-time-only
FHA loans are not limited to first-time homebuyers. Repeat buyers can use them too, subject to the program's rules and lender approval. The same is generally true of VA loans and USDA loans, which have their own eligibility rules unrelated to first-time status. For more on how FHA loans work, see the complete guide to FHA loans.
Programs that often are first-time-focused
Many programs run by state housing finance agencies, along with some city, county and nonprofit programs, are aimed at first-time homebuyers. These can include down payment assistance, closing cost help and below-market loan programs. Some of these programs waive the first-time requirement in certain designated areas or for certain groups, such as eligible veterans under some state programs. Others don't. For how assistance programs work in general, see down payment assistance programs: what buyers should know.
Conventional loan options
Some conventional loan options use first-time homebuyer status for certain low down payment features, and they may use a similar 3-year look-back. Lender requirements and investor guidelines vary, so ask a licensed loan officer which options you may qualify for. All loans are subject to credit approval and qualification.
Tax-related programs
Some tax-related programs and rules use their own definitions of a first-time homebuyer. Those definitions may not match the ones housing programs use. This guide isn't tax advice. Talk with a tax professional before making a decision based on a tax rule.
Other Requirements That Often Come Along
First-time status is usually just one of several requirements. Programs aimed at first-time homebuyers commonly add others, such as:
- Household income limits
- Purchase price limits
- A requirement to live in the home as your principal residence
- A homebuyer education course, often through a HUD-approved housing counseling agency
- Use of a participating lender
- Credit and other underwriting requirements
Some assistance comes with repayment or occupancy terms, such as a second loan that's due if you sell or refinance within a set period. Read the program terms carefully before you rely on it.
How to Check Whether You Qualify
The most reliable answer comes from the program itself. A practical way to check:
- Start with your state housing finance agency. Most states have one. Its website typically lists its programs, the first-time homebuyer definition it uses and any exceptions.
- Look for local programs. Some cities, counties and nonprofits run their own programs with their own definitions.
- Talk with a licensed loan officer. A loan officer who works with these programs can explain which ones you may qualify for and what documents they'll need.
- Gather your ownership history. Note any homes you've owned, when you bought and sold them, whether you lived in them and whose names were on the title.
- Ask how co-buyers are treated. Some programs require every borrower to meet the definition. Others look at it differently. Ask before you apply.
Programs may confirm your status with tax returns, a credit report or a signed statement. Answer honestly and keep copies of what you submit. Getting pre-approved rather than just pre-qualified can also help you learn early which programs fit.
The most reliable answer comes from the program itself, not from a general definition.
If you're buying for the first time, or for the first time in a while, it can also help to review common first-time buyer mistakes before you start.
Frequently Asked Questions
Can I be a first-time homebuyer if I've owned a home before?
You may be. Many programs use a definition that looks at whether you had an ownership interest in a principal residence during the 3 years before the purchase. If you haven't, you may count as a first-time homebuyer for those programs. Check the program's exact definition.
Do FHA loans require you to be a first-time homebuyer?
No. FHA loans are not limited to first-time homebuyers. Eligibility depends on the program's rules and lender approval.
Does owning a rental property disqualify me?
It depends on the program. Under many definitions, only ownership of a principal residence counts. Some programs look at any ownership. Ask the program administrator or a licensed loan officer.
If my co-buyer has owned a home recently, can we still use a first-time program?
It depends on the program. Some require every borrower to meet the definition, and others treat co-buyers differently. Ask before you apply.
Where do I find my state's definition?
Your state housing finance agency is a good place to start. Its program guidelines typically spell out the definition and any exceptions.
The Bottom Line
"First-time homebuyer" often means something different from what it sounds like. Many programs look back a set number of years, often 3, and some add exceptions for specific situations. Because definitions vary by program, check the exact rules with your state housing finance agency or a licensed loan officer before you assume you do or don't qualify.
This article is general information, not legal, tax, lending or financial advice. First-time homebuyer definitions, program rules and eligibility requirements vary by program, state and lender and can change. All loans are subject to credit approval and qualification. Talk with a licensed loan officer, your state housing finance agency or a tax professional about your specific situation. Advice4Homeownership is a publisher, not a lender.
