Many of today’s homebuyers rely on mortgage assistance programs to buy a home. There are more than 2,500 grants and loans programs nationally, with at least two active programs in each state, according to a recent report by the Urban Institute.

The bulk of these assistance programs, however, are geared toward first-time homebuyers. Let’s explore how to qualify for first-time homebuyer programs.

What is a first-time homebuyer?

The term “first-time homebuyer” can be misleading in respect to a majority of these programs. The result is that people with the qualifications for a first-time homebuyer mistakenly pass up the opportunity for assistance.

So, what is considered a first-time homebuyer? What qualifies as a “first-time homebuyer” under many programs is often someone who hasn’t owned a home in at least three years or more. This distinction can make all the difference to applicants who were homeowners more than three years ago and are back in the market today. Alanna McCargo, president of Ginnie Mae, agrees that this can be confusing for some buyers.

“There’s a lot of misperception about what it takes to qualify for these programs. People are confused by income levels, they think they made too much, or they don’t realize that they could have owned a home before to qualify,” McCargo says.

Confusion as to who qualifies can pose problems because, without assistance, millions of families today wouldn’t be able to buy a home.

First-time homebuyer qualifications

Prices are on the rise, new construction for entry-level housing is lagging and inventory is squeezed. Add in stagnant wage growth, increased consumer debt including student loans and, and many hopeful homebuyers might feel iced out of the market altogether.

The three main barriers to homeownership are down payment, access to credit and affordable housing, according to Urban Institute’s report.

The increase in low down-payment lending is perhaps a reflection of some of the problems Americans are facing. Traditionally, FHA has been the main source of low down-payment lending, but that’s changed in recent years. Conventional lenders, like Bank of America, as well as Fannie Mae and Freddie Mac have low down-payment programs.

Many people who would qualify as first-time homebuyers are previous homeowners, including those who lost their homes in the crisis and are just now getting back on their feet.

Here’s a look at some popular home loan programs for first-time buyers:

Loan program When are you considered a first-time homebuyer again? Down payment requirement Additional features
HomeReady Program through Fannie Mae First-time and repeat buyers welcome 3%
    • Must complete a homebuyer education course


  • Must meet income criteria
HomeOne First-time homebuyer indicates no ownership interest in a home in the previous three years 3%
  • Must complete a homebuyer education course
Home Possible First-time and repeat buyers welcome 3%
  • Must meet income criteria
HomePath Ready Buyer First-time homebuyer indicates no ownership interest in a home in the previous three years First-time buyers can get 3% in closing cost assistance
  • Must complete a homebuyer education course<

If you’re unsure about a program’s qualification requirements, terms and rates, ask your lender to explain it to you and put it in writing whenever possible.

Other requirements for first-time homebuyers

So, now you know the answer to whether you qualify as a first-time home buyer again. But when purchasing a home, there are other qualifications to meet.

You’ll also need to meet the credit score requirements of the lender, satisfy any income restrictions, and have a relatively low debt-to-income ratio.