I know, my headline may be a little offensive to some, but I had to get your attention. This is going to be well worth your 4 minutes to learn a few things about first time home-buyers and first time home-buyer programs.
I’m sure you have heard of Toys R Us and Babies R Us, right? Ever heard of Entitlements R Us? Nope. It doesn’t exist. And I’m going to break the notion that just because you are a first time homebuyer, that you are entitled to those programs or any down payment assistance. (besides, entitlements are only for the government).
A pre-cursor: I can ONLY speak to the down payment assistance programs and first time homebuyer programs in Minnesota. Check with your favorite loan officer or real estate agent for other state and county requirements outside of MN.
Lesson #1: You have to QUALIFY for first time homebuyer programs and down payment assistance in MN. The sheer fact that you are a first time homebuyer (haven’t owned a home in the past 3 years) only means that you have met the 1st criteria in qualifying. Other criteria include:
- Household income: You have your 18 year old son/daughter living with you and he/she has a job? That income is counted. ALL household income. If you are over the income limits of the particular FTHB program or DPA, you are disqualified.
- Need mom and dad to co-sign? You are disqualified for most programs. All borrowers must occupy the home being purchased.
- Assets: You have a lot of money in the bank, but because you are a FTHB, you still want to exercise your “right” to those programs. Nope….disqualified. Most first time homebuyer programs and down payment assistance in Minnesota have asset limitations.
- Borrower minimum contribution: Even if you may be getting DPA, you will still be required to have a minimum investment of your own money into the transaction.
- To take a test drive and find out preliminary what you may be qualified for, click the image below
Lesson #2: So often, I hear buyers stating that it shouldn’t matter if their credit is bad. Or it shouldn’t matter if they do not have current income. They are a first time home-buyer! Remember what I said about entitlements? Yea, they are only for the government. You still have to qualify for a mortgage. All the same guidelines including credit, employment, income and asset requirements still apply. Regardless if you are seeking the FTHB (first time home-buyer) programs and DPA (down payment assistance).
Lesson #3: Just because you technically qualify for a mortgage and the FTHB program with DPA, doesn’t necessarily mean that you will want it in the end. Note of redemption: Please understand, no one advocates for the first time home-buyer more than I do. However and with that said, I will be very clear in delivering accurate information of all options. Please speak with a seasoned and knowledgable loan officer. Find out about the subsidy recapture tax. Know that the down payment assistance may need to be paid back. Ask about that DPA being a 2nd lien. I am making these statements in quite an indifferent manner. They are neither good nor bad. But you gotta know. Knowledge is power.
Lesson #4: Set yourself up for success. Do not listen to anyone who tells you that you can get first time home-buyer and down payments assistance. The only person who can tell you that is a seasoned and qualified loan officer. Why? Because only that person will be able to tell you, based on documentation, if you are QUALIFIED to receive it.
Happy House Hunting!
Tom Garrity – Manager, Mortgage Loan Office NMLS ID # 270189
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