What If I'm a First-Time Homebuyer but My Partner Isn't?

Buying a home is expensive, so many buyers look for ways to cut costs and save money. One such method is to apply for first-time homebuyer grants and down payment assistance programs. 

There are many down payment assistance programs and first-time homebuyer grants/loan programs available all over the country to help first-timers buy homes. But what if you’re a first-time buyer and your partner is not? Can you be a first-time homebuyer if your partner owns a home? Let’s explore these questions and more.

What are down payment assistance (DPA) programs and first-time homebuyer grants?

There are thousands of down payment assistance programs that help low-income and first-time buyers afford their down payments. They are all different with different eligibility requirements, but they are similar in that they help pay for all or some of the down payment and/or closing costs. Some are grants that don’t have to be paid back at all, and some are loans (of all different kinds, such as deferred payment loans, no or low-interest loans, and even forgivable loans which don’t have to be paid back as long as you meet the requirements). There are some that are offered nationally regardless of your location, but some are offered by state/local governments, so be sure to look into programs in your municipality and state. There are even some offered by nonprofits, so cast a wide net in your search. You may even find that your employer has a program.

Who is considered a first-time homebuyer?

You are considered a first-time buyer if you have never owned a home before or if you have owned a home (or even several homes), but you haven’t owned one in the past three years. Three years is the standard measurement for “first time” home ownership. If you have owned a home in that time or you currently own one, you are not considered a first-time buyer, and you will not be eligible for first-time buyer benefits. But there is one exception to the three-year rule–if you own/owned a mobile home, for example, that was “not attached to a permanent foundation,” you can qualify as a first-time buyer. This is because, as far as mortgage lenders are concerned, mobile home ownership is slightly different and does not count in the same way.

Where can I find first-time homebuyer grants?

Grants are offered nationwide, but the hard part is finding them because most of them are not advertised. As such, you will need to research and ask around to find the options available to you. No matter where you live or are looking to live, there is a local housing authority that can help point you in the right direction on grants that you may be eligible for. So start there. In addition, your realtor and loan officer can help. Remember, you’re not the first person to ever need financial help, so they’ve been through this before. Both of them have likely worked with people in the same boat as you, so they can advise you of some programs. Your lender may even have a program that they offer themselves, and your state may offer tax credits to first-time buyers. Ask around and do your research.

Also ask your credit union or bank, as many offer their own grant programs to benefit their members and local community. You may even be entitled to a discount if you get a mortgage through a banking institution that you already use. Many non-profits offer grants as well, but one important clarification to make is that the federal government doesn’t provide grants to borrowers. Instead, the FHA grants funds to cities and states, which then give grants to borrowers.

Who is eligible for first-time homebuyer grants?

All grants and loans have eligibility requirements, so just because you’re a first-time buyer doesn’t mean you are necessarily qualified for all first-time buyer grants. But you may be qualified for some! The requirements differ from grant to grant, but many share requirements, such as taking a homebuyer education course, minimum credit score, income limits (low to moderate income), making the home your primary residence, home purchase price limits, etc…

With grants having different requirements, applying will require you to do some leg work to find them and see which ones you are eligible for. Some have looser requirements and some are more restrictive; it just depends. Keep in mind, that there is no harm in applying for multiple grants at one time. You can apply to every grant you’re eligible for to increase your chances of getting one. Here are just a few grants to get you started in your search:

National Homebuyers Fund

This grant is offered by the National Homebuyers Fund (NHF) to help low to moderate-income buyers achieve home ownership. This down payment assistance program offers up to 5% of your mortgage amount, which can be given as a grant, a standard loan, or a forgivable loan that is forgiven in full after you’ve lived in the home for three years. You do not have to be a first-time buyer to qualify. This program is also flexible with its requirements regarding income limits, credit score (around 640), and debt-to-income ratio (45%).

HomePath Ready Buyer Program

This program was created by Fannie Mae, which helps low to moderate-income buyers afford homes. This program has strict eligibility requirements but offers assistance up to 3% of the cost of the home and also allows a down payment as low as 3%. To qualify, you must purchase a HomePath property, which is a home that Fannie Mae foreclosed on and took ownership of after the borrower defaulted on his loan. You will also need to take a homebuying education course, move into the home within 60 days of closing, make the home your primary residence and be a first-time buyer.

Good Neighbor Next Door Program

Offered by the U.S. Department of Housing and Urban Development (HUD), this is a forgivable loan, meaning it does not need to be paid back as long as you meet their requirements. Current and former teachers, firefighters, EMT’s and police officers are eligible for this loan which offers a 50% discount on the home. But you must live in the home for three years, it must be your primary residence and the home must be located in a designated economically-distressed area also called a “revitalization area.” Like the HomePath Ready Buyer Program, the home must be owned by HUD, which took possession of the home due to a foreclosure.

Will I qualify as a first time homebuyer if my partner is a homeowner?

You will qualify as a first-time buyer if your partner hasn’t owned a home in over 3 years. But if your spouse has owned a home in that timespan or currently owns one, you will not qualify. This has been decided by the IRS as well as by national property laws. Homeownership by one spouse is shared with the other spouse, as the home becomes a common asset. Simply by getting married, the spouse of a homeowner gets an ownership interest in the home. In other words, one spouse owning a home is basically the same as both spouses owning a home. This is how, in the event of a death, a deceased person’s property/estate is passed to his spouse, even if the spouse isn’t on the deed. But as long as neither of you has owned a home in three years, you are considered a first-time buyer (again).

What are some low-down-payment loan programs if I don’t qualify as a first-time buyer?

If you are not eligible for any first-time grants, forgivable loans, or DPA programs to help with your down payment and/or closing costs, there are affordable loan programs with low down payment requirements to look into, namely FHA loans, VA loans, and USDA loans. But they have their own sets of requirements that you will need to meet. FHA loans, considered the friendliest loan for first-time buyers, only require 3.5% down. USDA loans do not require a down payment at all, but they are only available for homes in rural areas and there is an income limit of 115% of the local median income. VA loans are only available to military members/veterans but require no down payment.

The Bottom Line

First-time homebuyer grants and down payment assistance programs exist for a reason–to help. So use them if you are eligible! But they are hard to find, so do your research and ask around to find the options available to you. As long as neither you nor your spouse own another home or have owned a home in the past three years, you will be considered a first-time buyer.