Did you do your taxes? I know, I know, don't throw something at me - nobody wants to hear about taxes. But, it might just be something that you'd like to know about if you are in fact a first time home buyer. Let me get into the details a little more.
According to the U.S. Department of Housing and Urban Development (HUD), you are considered a "first time homebuyer" if you meet any of the following conditions:
- An individual who has only owned a property that was not in compliance with state, local or model building codes - and which cannot be brought into compliance for less than the cost of constructing a permanent structure
- An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations
- A displaced homemaker who has only owned with a spouse
- A single parent who has only owned a home with a former spouse while married
- An individual who has not owned a principal residence during the three year period ending on the date of purchase of the property. A person's spouse is also considered a first time homebuyer if either person meets the above test
So what exactly does this mean? Essentially, if you don't currently own a house, and have not owned a house on your own, you are probably qualified as a first time home buyer. As a first time home buyer, you can qualify for mortgages with down payments as low as 3.5% of the purchase cost. This is also applicable on 1 - 4 unit properties, so if you were thinking of making a rental property, this applies to you too! (source: hud.gov)
FHA Loans can assist you with getting low down payments, low closing costs, and easier credit qualifications. They are also able to assist with getting energy improvement costs into your mortgage. Curious what the limits on lending is for FHA backed loans? There is a breakdown of those limits here if that is something that you are interested in. One key thing to remember though, when you hear "FHA Loan", you are not actually getting a loan - you are getting a loan insured by the FHA.
Remember how I started this talking about taxes? (I'll duck...) At one point there was an IRS first time homebuyer credit, which you can read more about here, which would give you credits ranging from $3000 - $8000, but those days are gone. The tax credit expired on May 1, 2010. But to drive home a point, you should always be looking into options and programs available to you, as they do constantly change. FHA, IRS, and other banking rules change enough that it's always worth asking what's available to you. Research is the key to success!