What to Know About First-Time Home Buying
July 30, 2026
So while you do not need to be a first time buyer to get an FHA loan you may need to meet that definition to qualify for down payment help. That said, "first time buyer" is a flexible description as we discover below.
Do you need to be a first-time homebuyer to secure an FHA loan?
No. Homeowners can apply for another FHA mortgage if they meet credit, income, and debt requirements. The new loan must be for a property the buyer uses as their main residence.
How do the FHA and HUD define a first-time homebuyer?
The FHA and HUD definition of a first-time buyer is one who has not owned a main home within 36 months prior to case number assignment. Former homeowners who sold properties over three years ago qualify.
Single parents who only shared property ownership with a former spouse also qualify. Displaced homemakers who previously shared a home with a spouse meet the standard as well. Remember that what counts at the FHA and HUD may not be the same for a state/local program. Your experience may vary.
What do borrowers need to know about first-time home buyer status?
State and local governments often require first-time buyer status. Program grants and secondary loans that cover closing expenses demand compliance with the three-year standard. If you haven't owned property in three years, you may qualify, but the home you want to purchase with the new loan must be your intended home address.
Also, down payment assistance is not standardized from state to state. The details of one state's program may not match another and if you are relocating to a new area it's not safe to expect the same standards in your new housing market.
What credit scores do applicants need?
Scores of 580 or higher require a 3.5 percent down payment. Scores between 500 and 579 require a 10 percent down payment.
Applicants with credit scores below 500 do not qualify. Borrowers who put down 10% or more in any circumstance may qualify to have their FHA mortgage insurance removed after 11 years. These guidelines affect loan approval, but they may not be applicable to the state/local down payment assistance program, so you'll need to check which guidelines apply.
What work history must applicants show?
Lenders require verification of two years of employment in order to qualify for an FHA mortgage. Higher education, trade school, and military duty count toward this timeframe. These standards are not necessarily applicable to down payment/closing cost assistance, but be sure to check program guidelines.
How do debt levels affect approval?
Lenders compare monthly debt payments against gross monthly earnings. Housing costs should not exceed 31 percent of earnings. Total monthly debt obligations should be at or below 43 percent of gross income in typical cases.
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