You're a First Time Homebuyer? So What!

Mortgage and Lending with iLoan

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 homebuyers and first time homebuyer 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 preliminarily 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 homebuyer! 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 homebuyer) 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 homebuyer 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 homebuyer 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! 

Comments (10)

Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Excellent post!  Many of the Missouri programs follow very similar rules and requirements!  Entitlement is killing our country- unless it is the parents that supply this endless amount of free cash!  I also support and sell to many FTHB- most of my clients find that the restrictions- Like having to own the property for 7 plus years or they ahve to pay it back- would rather come up with the cash themselves!

Apr 21, 2013 11:31 PM
Sherri Sherpy
NMLS #287770

I completely agree Shanna!  Just because it is available, doesn't neccessarily mean that everyone will choose it.  As a loan officer, it is our duty to lay out all pros and cons and ultimately let the client choose what is best based on the facts.

Apr 21, 2013 11:37 PM
Maria Morton
Platinum Realty - Kansas City, MO
Kansas City Real Estate 816-560-3758

Excellent article for first time home buyers, Sherri! Too many think that they can qualify for some program when in reality, they either don't qualify or don't want the restrictions. 

Apr 22, 2013 07:56 AM
Donna Quanrud
Coldwell Banker Burnet - Eden Prairie, MN
Donna Quanrud Southwest Metro Homes

We need more truth talk out there.  Go girl!

Apr 22, 2013 09:55 AM
Sherri Sherpy
NMLS #287770

Thank you Maria and Donna!  It's all about the education...un-sugar coated education.  :)

Apr 22, 2013 10:03 AM
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

Good stuff Sherri.  The title didn't offend me at all, but it did get my attention and made me read your article.  Well written!

Apr 22, 2013 10:24 AM
Charles Dailey
iLoan - NMLS ID#4474 - Saint Paul, MN

Love your posts Sherri. You have serious blog-tude.  :)


Apr 22, 2013 11:02 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

We have a similar program in New Hampshire.  It is important for buyers to fully understand the program and to determine if it is a good time for them to buy a home.

Apr 22, 2013 12:14 PM
Sherri Sherpy
NMLS #287770

Thank you Amanda and Jared!

Thanks Charles!  Blog-tude...I love it!

I so heartedly agree Joan.

Apr 22, 2013 01:08 PM
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

Great information!  You are absolutely right that there are too many buyers out there that believe the myth that anyone can get money these days.  There are always strings to the that "free money" called down payment assistance.  You do pay for it in the end, whether it is a higher rate, or a recapture tax....sometimes it makes better sense to work with a credit union or lender that provides essentially 100% financing eliminating PMI and the you said, a seasoned loan officer is the key!

Apr 23, 2013 10:32 AM