How Do I Qualify as a First-Time Home Buyer?

Read Time: 3min
Last Updated: 5/21/2021

If you’re wondering how to qualify as a first-time home buyer, you’re not alone. With the average home buyer age of 32 and average moderate incomes of $75,000, chances are financial burdens like lingering student loan or credit card debt have you second-guessing if buying a home is within your reach. 

Fortunately for first-time buyers, the housing market is only successful when people are buying homes. State and federal housing departments like the U.S. Department of Housing and Urban Development are willing to cut first-time home buyers a little slack by offering home loans and down payment assistance programs. This doesn’t necessarily mean you get a free pass, though. For those wondering how to qualify as a first-time home buyer, you’ll need to make sure you do qualify as a first-time home buyer and that you’ve got your credit score, debt to income ratio and down payment where they need to be.

Who Qualifies as a First-Time Home Buyer?

Who qualifies as a first-time home buyer has equal parts obvious and surprising answers. Let’s start with the obvious. A first-time home buyer is an individual purchasing their first primary residence. Aside from true first-time home buyers, several other qualifying situations can make an individual a first time home buyer all over again.

The U.S. Department of Housing and Urban Development qualifies the following individuals and their situations as eligible first-time home buyers:

  • An individual with no ownership in a principal residence for three years, including spouses in common-law states in which they were not placed on the deed or had their financials considered in purchasing their first primary home.
  • Single parents who only owned a home with a former spouse while married.
  • Displaced homemakers.
  • Individuals who’ve owned a primary residence not attached to a permanent foundation (mobile home).
  • Individuals who’ve owned a non-compliant property. If the property fails to meet state and local building codes and cannot be made compliant for less than the cost of constructing a permanent structure, the owner can be considered a first-time home buyer again.

How to Qualify: First-Time Home Buyer Loans

Now that you know what qualifies as a first time home buyer, the next question is: how to qualify for first-time home buyer loans? There are some steps for first-time home buyers to take that will help better the chances of qualifying for a home loan.

Credit Score

Many first-time home buyer loan programs welcome credit scores as low as 580 to still qualify for a low down payment amount. If your credit falls below a 580, you can still be eligible for an FHA loan; however, your down payment amount will be more (10%). Other first-time buyer programs require a higher credit score (usually 620 or more) to qualify.

Debt-to-Income Ratio

Debt-to-income ratio (DTI) is the percentage of your monthly debt divided by your monthly pre-tax income. Generally, mortgage lenders want to see that your DTI is 36% or lower, ensuring that you’ve got enough to pay your mortgage and your bills. 

Down Payment

Down payment amounts will vary from types of loan programs and your credit score. FHA loans allow as little as 3.5% down, while USDA loans require zero down payment for first-time home buyers who meet all eligibility requirements.

As you prepare to buy your first home, speak with a knowledgeable mortgage company about all of your mortgage questions and concerns. From questions like “what is a mortgage” to “what to do before applying for a home loan?” Wyndham Capital is ready with the answers. Speak with one of our mortgage loan officers today to find out where you stand on your home loan journey.

Interested in learning more about how Wyndham Capital can help you achieve your home lending goals?

With more than 21 years in the industry, we’re a leading fintech mortgage lender saving current and potential homeowners money and time through transparent rates, zero junk lender fees*, and technology that automates over five million tasks each month. We’ve served over 100,000 borrowers, boast a 98% customer satisfaction rating and 4.9 stars on thousands of online reviews, and provide a “mortgages without migraines” experience. (*Note: Wyndham does not charge junk fees, application fees, processing fees, or underwriting fees. There can be fees charged directly by Third Parties for services such as, but not limited to, title, settlement, appraisal, taxes, and insurance.)

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