"First-time homebuyer" sounds like it means someone who has never owned a home. In mortgage programs it means something broader: anyone who hasn't owned a principal residence in the three years before the new purchase. A buyer who sold a home five years ago and has rented since counts.
How HUD, Florida Housing and Fannie Mae define it
HUD. A first-time homebuyer is someone who had no ownership in a principal residence during the 3-year period ending on the purchase date. If either spouse meets that test, HUD treats both as first-time buyers. HUD also counts a single parent who only owned a home with a former spouse while married, and a displaced homemaker who only owned with a spouse.
Florida Housing Finance Corporation. Florida Housing uses the IRS definition for its homebuyer programs: you can't have owned and occupied your primary residence during the three years before the purchase. Both conditions matter, so owning a rental you never lived in doesn't by itself end first-time status for these programs.
Fannie Mae. For Conventional loans, a first-time buyer is someone who will live in the home and had no ownership interest, sole or joint, in any residential property during the prior three years. Fannie Mae's test is stricter on rentals, since any ownership counts.
Where first-time status changes your numbers
FHA loans are open to first-time and repeat buyers alike, with 3.5% down from a 580 score. Status starts to matter in two places. Florida Housing's down payment assistance, including Florida Hometown Heroes, is built for first-time buyers. And the standard Conventional 97% loan, which allows 3% down on a single-family home, needs at least one first-time buyer on the loan.
On a $320,000 single-family Conventional purchase, 3% down is $9,600. A buyer who misses the first-time test, and earns too much for Fannie Mae's HomeReady 3% option, puts 5% down instead: $16,000. For that buyer the definition is worth $6,400 of cash at closing.
A worked example: counting the three years
A buyer sold her home and moved out 30 months ago. The 3-year window is 36 months, so she reaches first-time status for Florida Housing's programs in 36 − 30 = 6 months. She can get pre-approved now with FHA, which has no first-time rule, or time her closing for month 37 to use state assistance. A closing date after the 36-month mark is what counts, so the contract can be signed a few weeks earlier.
Proving first-time status
Lenders confirm it from your credit report, tax returns and a signed statement on the application. A buyer who has rented for three years usually has nothing extra to show. If a past home sold recently, keep the closing statement from that sale, since its date starts the count.
See what you can buy as a first-time buyer with the home affordability calculator. To find out which first-time programs you qualify for today, call AAA Capital Funding at 888-601-8344.