First-time Home Buyer

What It Means

A first-time home buyer, as defined by most federal and state housing programs, is an individual who has not owned a principal residence during the three-year period preceding the purchase. Some programs define the term more broadly — including individuals who have only owned with a former spouse or who have owned a property that did not meet building code standards.

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In co-buying, first-time buyer status is evaluated at the individual level, not the group level. One co-buyer may qualify as a first-time buyer while another does not — and this distinction can affect which loan programs and assistance resources are available to the group.

How First-time Status Affects Co-buyers

First-time home buyer programs often provide benefits including lower Down Payment requirements, reduced interest rates, down payment assistance grants or loans, and tax credits. However, eligibility rules vary by program. Some programs require all borrowers on the Joint Mortgage to be first-time buyers, while others require only one.

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When a co-buyer group includes both first-time and repeat buyers, the group should work with their loan officer to determine which programs remain available and whether a different borrower configuration — such as having the first-time buyer apply separately or as the primary borrower — provides access to better terms.

Why It Matters for Co-owners

First-time buyer benefits can meaningfully reduce the upfront cost of purchasing a home. For co-buyer groups, understanding each member's first-time status early in the process allows the group to optimize their financing strategy. If one co-buyer's first-time status unlocks a down payment assistance program, the group should discuss whether that benefit is shared proportionally or attributed solely to the qualifying co-buyer — and document the decision in the Co-ownership Agreement.

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Co-buyers should also be aware that purchasing a home — even as a co-buyer with a minority Ownership Share — may disqualify them from first-time buyer programs for future purchases. This is an important consideration for any co-buyer who expects to purchase independently in the future.

Key Points

• Commonly defined as someone who has not owned a principal residence in the past three years
• First-time status is evaluated individually — each co-buyer's eligibility may differ
• May unlock lower down payments, reduced rates, assistance programs, and tax credits
• Some programs require all borrowers to be first-time buyers; others require only one
• The Co-ownership Agreement should address how first-time buyer benefits are allocated
• Purchasing as a co-buyer may disqualify the individual from first-time programs for future purchases