Do Couples Lose First-Time Home Buyer Status If One Partner Bought a Home Before?

Taking out a mortgage as a first-time home buyer comes with many benefits including access to closing cost assistance, potential tax credits, and no or low-down payment options. But do couples lose first-time buyer status if one partner bought in the past?

No, not always, and whether you qualify depends on the program rules and ownership timelines. According to the HUD, you may still qualify as long you haven’t owned a home in the last three years.

What counts as a first-time home buyer?

You’re usually considered a first-time home buyer if you haven’t owned a primary residence in the last three years. Basically, you may have owned a home in the past, but haven’t owned one recently.

According to the Department of Housing and Urban Development (HUD), you may also qualify if:

• You’re a single parent who’s only ever owned a home with a former spouse.
• You’re a displaced homemaker who’s only owned a home with a spouse.
• Your home wasn’t fixed to a permanent foundation (like a mobile home).
• Your home wasn’t in compliance with state, local, or model building codes.

However, not every lender or first-time home buyer program uses the HUD’s criteria. So anytime you’re looking into a resource for first-time home buyers, it’s important to find out how they define it.

Common scenarios couples face when buying a home together

Let’s look at some common scenarios couples face when attempting to buy a home together.

Scenario 1: One partner has never owned, and the other hasn’t owned in over three years

Let’s say you’ve never owned a home, and your partner hasn’t owned a home in over three years. This means as a couple, you both meet the most common definition for first-time home buyers and may be eligible for various benefits and programs.

Scenario 2: One partner owned a home within the past three years

Another scenario you might face is that you’ve never owned a home, but your partner has owned a home within the past three years. Even though you’ve personally never owned a home, since your partner has, you both may be excluded from first-time home buyer benefits.

Scenario 3: One partner currently owns a home

If you or your partner currently owns a home, you both may not qualify for first-time home buyer status. However, there may be an exception if the home you or your owned wasn’t a primary residence, but was an investment property instead.

How mortgage programs evaluate criteria for couples

When you apply for a mortgage with another person, you’re taking out a joint mortgage. In a joint mortgage, you share responsibility for the loan with at least one other person, and both parties need to submit an application.

When you apply, your lender evaluates the same criteria as they would for an individual application, like credit score, income, debt-to-income ratio, and employment history. The main difference is that your lender considers your combined financial information.

Some assistance programs require all borrowers to be first-time home buyers to qualify, but that’s not the case for every mortgage program. For instance, Fannie Mae’s 97% Loan-to-Value Mortgage requires at least one borrower to be a first-time home buyer.

In addition, local down payment assistance programs may offer some leeway for single parents or individuals in certain occupations. And some programs look only at the applicant, not the household.

Ways to qualify as a first-time buyer if your partner bought a home before

If you want to qualify as a first-time home buyer but your partner bought a house before, you have a few different options available. One option is to apply on your own, so you don’t have to lose access to valuable first-time home buyer benefits.

If you don’t like that idea, you and your partner could wait until the three-year window passes. That could make sense if you have less than a year to wait. You could also look for local programs with more flexible first-time home buyer definitions by contacting your city or county’s housing authority.

Whatever option you end up choosing, just make sure to evaluate any potential trade-offs. For example, if you’re considering applying on your own, consider how an individual application might affect your income, approval odds, and potential interest rate.

The bottom line

So, do couples lose first-time buyer status if one partner bought in the past? Not necessarily. While rules vary by program, many provide paths to qualify, especially if it’s been more than three years since ownership.

If you’re unsure of where you stand, check with your lender or housing counselor for more guidance. There are still paths to qualify, even if one partner owned a home before.