The purchase of a new home represents one of the largest purchases that you will likely ever make in your lifetime. The process can be rather straightforward, but thereare also likely many questions that you may have about how you get from point A to point B. Many of those questions are going to revolve around how to make the process easier and to swing things in your direction.
For many people, one of the best questions to ask when purchasing a home is if they qualify as a first-time homebuyer. After all, there are a number of benefits to those who are buying a home for the first time. Those benefits can be seen on a local and statewide level, as well as being felt on a federal level, thanks to benefits when filing your taxes. Who is it that qualifies as a first-time homebuyer? You may fit into that category in a number of ways.
Obviously, if you have never owned a home before, you would automatically qualify for benefits under a first time homebuyers program. You might be surprised to learn that there are other circumstances in which you can qualify as a first-time homebuyer, even if you have owned a home in the past.
The basic rule of thumb is if you have not owned a principal residence within the past 3 years, you would still qualify as a first-time homebuyer. Those standards are recognized by FHA guidelines, as well as being recognized by the California Housing Finance Agency (CalHFA).
If you have previously owned a home, it doesn’t matter if you sold the home or if you lost it due to foreclosure. An investment property also does not count toward a principal residence, so you may still qualify as a first-time homebuyer in that way as well.
If you are married, you may have an extra chance at qualifying as a first-time homebuyer. If you have owned a home in the past three years, but your spouse was not on the mortgage, then both of you may still qualify as a first-time homebuyer and receive the benefits that are associated with it.
The guidelines in California may also differ from one area to another. There may also be other qualifiers, such as your maximum income level that may vary according to the size of your family or the county in California where you live. In some cases, you may still qualify as a first-time homebuyer, even if you have owned a home in the previous three years. In order to qualify, you would have to live inside a zone designated by the CalHFA.
As a first-time homebuyer, you have many benefits available to you. For example, you may be able to borrow against your IRA to use as a down payment without a standard penalty of 10%. If you do borrow against your IRA, the money must be used within 120 days and there is a limit of $10,000 on this exemption. You can also convert part of your interest on your mortgage to reduce your tax liability through the CalHFA MCC program.
You may also qualify for additional benefits, including the California Home Buyers down Payment Assistance Program. Provided you meet the requirements, including income, credit and loan requirements, it can greatly reduce your need to save up a large down payment prior to the time that you purchase a home.
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