Most people assume they’re not a first time home buyer because they have owned a home before but that’s not how the mortgage definition actually works. Let’s say you have owned before but have been renting the last few years, then you probably qualify. The clock resets every 3 years. If you have not had your name legally attached to an OWNED property for at least three years, then you qualify as a first time homebuyer to take advantage of low down 3.5% FHA (which are actually NOT for first time homebuyers but anyone!) and 3% down CONVENTIONAL loans which are specifically for buyers who haven’t had their name on any title or loan in three years. Otherwise, you qualify for an FHA or 5% down conventional which is for everyone buying a primary residence regardless of previous ownership.

If you’ve co-signed or were on a home that sold in less than three years from the time you wish to apply for a new loan, then you do not qualify. Your name must have been on no loan or title in the last three years to qualify. If it’s more than three years, you do. First time home buyer loans are primarily low down programs to help people get into their first home or first home in a while so that’s why it applies to more than just those who are brand new to buying real estate but also to those trying to own again. Many people can use these after the first 12 months to then use as income properties or so long as they live in at least 6 months of the year after on FHA and certain grants, they’re fine. It’s mortgage fraud to not follow the terms of your loan and using the property as any type of rental so know your loan conditions! They have different terms so you need to consult with your mortgage originator and go over the terms if you’re hoping to one day rent out the property or turn into another type of income-generating endeavor soon after close.

If you haven’t been on a loan or title in three years, then absolutely look into a 3% conventional FIRST. FHA not only charges an UPFRONT MIP, it’s for the life of the loan usually. You can remove PMI for conventional loans but most people confuse it with MIP on FHA loans which is NOT the same thing and almost always permanent. There are some conditions if you put a lot down but that’s rare. Conventional loans offer greater relief from costs and paying fees so check them first. You want more of your money going towards principle than fees and interest!! If your credit and DTI aren’t great, you DO NOT have to be a first time homebuyer to get an FHA mortgage. That is a longstanding myth and again, confused with the low down conventional program of 3% and removable PMI (NOT for FHA which uses MIP). You can use FHA as often as you need so long as it’s your primary residence and you’re not clearly selling every few months and flipping those properties. If you owned your home over 90 days and then sold, you can still use one as long as no mortgage fraud is happening and all parameters of FHA were followed. Again, consult with your MLO to ensure you’re following the rules of your mortgage terms.

There are FHA programs however that allow you to buy and flip, like HomeStyle loans and such but those are specific programs and not the standard FHA or Conventional loan 95% of buyers use that you’re likely going to be using as well. If you’re looking for those programs, make sure you’re honest and upfront with your lender to make sure you get the right program as those loans also help fund renovation costs and help keep contractors on point. Don’t commit mortgage fraud to try and get a better deal! Just get the right loan and you should get the best deal anyway because many loans are available to investors that are not all requiring 20%. If you do have a big down though for any type of loan you will absolutely save on the mortgage insurance costs lenders charge but it’s not necessary for many loans. Ask your mortgage person!

For more information email jenniferlarsonent@yahoo.com and please put LOAN in the subject line so it doesn’t get missed. Thanks!