SimpleOS Homebuyer Education Center

First-Time Homebuyer Guide

You may qualify as a first-time homebuyer even if you've owned a home before.

Learn what qualifies as a first-time homebuyer, available programs, down payment assistance options, and how to prepare for a successful home purchase.

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Definition

What Is A First-Time Homebuyer?

Many people believe a first-time homebuyer is someone who has never owned a home.

That is not always true.

For most mortgage and down payment assistance programs, a first-time homebuyer is defined as:

A person who has not owned a primary residence during the previous 3 years.

Examples that may potentially qualify

✅ Never owned a home
✅ Owned a home 5 years ago
✅ Owned investment property only
✅ Owned a vacation home only
✅ Divorced and no ownership interest in a primary residence for 3 years

Potentially qualifies.

Common myth

FHA, VA and USDA Are Not First-Time Homebuyer Loans

FHA

Available to first-time and repeat buyers.

Available to eligible veterans and active-duty service members regardless of homeownership history.

USDA

Available to eligible rural-area buyers regardless of whether they have purchased before.

These programs are often used by first-time buyers because they offer low down payment options, but they are NOT first-time homebuyer programs.

Assistance pathways

Programs Designed To Help First-Time Homebuyers

Down Payment Assistance Programs

Assistance may come from housing agencies, municipalities, bond authorities, grants, or second-mortgage structures.

Common types

State programs
Local city and county programs
Bond programs
Grant programs
Deferred second mortgages

Potential benefits

Down payment assistance
Closing cost assistance
Reduced cash-to-close

Fannie Mae & Freddie Mac 3% Down Programs

HomeReady

As little as 3% down
Income limitations apply
Not required to be a first-time homebuyer

Home Possible

As little as 3% down
Income limitations apply
Not required to be a first-time homebuyer

Important myth: Many consumers believe HomeReady and Home Possible are only for first-time homebuyers. That is incorrect. These programs primarily focus on income eligibility and property occupancy requirements.

Quick comparison

First-time buyer status is not required for every low-down-payment option.

ProgramFirst-Time Buyer Required?Minimum Down Payment

FHANo3.5%

VANo0%

USDANo0%

HomeReadyNo3%

Home PossibleNo3%

DPA ProgramsOften YesVaries

Readiness map

Are You Ready To Buy A Home?

Step 1

Review Your Credit

Step 2

Understand Your Budget

Step 3

Verify Your Income

Step 4

Build Savings

Step 5

Meet With A Mortgage Professional

Step 6

Get Pre-Approved

Income education

Understanding Income Requirements

Income is one of the biggest sources of confusion for new buyers. Lenders generally need income that is documented, acceptable, and likely to continue under the loan program guidelines.

Income We Commonly Can Use

W-2 Employment

Hourly income
Salary income

Overtime

Typically requires a documented history and likelihood of continuance.

Bonus Income

Typically requires a documented history and likelihood of continuance.

Commission Income

Requires documented history.

Self-Employment Income

Business owners typically provide:

Two years tax returns
Business returns if applicable
Year-to-date profit and loss statements when required

Retirement Income

Documented retirement income may be considered when guideline requirements are met.

Social Security Income

Award letters and proof of receipt are commonly reviewed.

Pension Income

Pension income can be reviewed when documented and expected to continue.

Military Income

Eligible military income may be considered with proper documentation.

Rental Income

When guideline requirements are met.

Documentation warnings

Income We Often Cannot Use

This is where consumers make mistakes. The issue is usually not whether money exists; it is whether the income source is acceptable and verifiable for mortgage qualification.

Cash Payments With No Documentation

Income generally must be documented and verifiable.

Family Members Giving Money Every Month

A family member helping with bills does not automatically qualify as usable income. Income generally requires documentation and history under program guidelines.

Future Income

You typically cannot qualify using income that has not started yet.

Temporary Income Sources

May not qualify depending on program requirements.

Mortgage myths

Common Mortgage Myths

Myth #1: "I can use my spouse's income without putting them on the loan."

Reality: If income is needed to qualify, the income earner generally must be part of the qualifying process according to program guidelines.

Myth #2: "I can qualify using money my parents send me every month."

Reality: Mortgage lenders require documented and acceptable income sources.

Myth #3: "I am self-employed and only need my latest bank statement."

Reality: Most agency programs require tax return analysis and documented income calculations.

Myth #4: "My overtime automatically counts."

Reality: Overtime usually requires a documented history and likelihood of continuance.

Myth #5: "If I was denied before, I can't buy a home."

Reality: Many denials can be overcome through credit improvement, savings accumulation, debt reduction, or selecting the right loan program.

Next step

Let's Make Homeownership Simple

Whether you're buying your very first home or returning to homeownership after several years, our team can help you understand your options and build a plan that fits your goals.

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