"first time home buyer" - definition

[Deleted]

Curious if anyone knows how this works.  

I am facing a possible amicable divorce.  I am on the deed to our house but not the loan; I did not contribute to the down payment or mortgage payments.  My plan would be to sign over my interest via quit claim, leave, and buy myself a home.  I've never owned a home in my name by myself.

I'm wondering if I'd meet the definition per IRS and lenders; or do the definitions vary?

[crashgizmo]

In our recent experience, the definition for FHA loans is that someone purchasing the home must not have owned a home for the last 3 years- so DH and I qualified because he owned our last home on his own, so I was the first time homebuyer. I am not sure in your situation if lenders would consider you a homeowner or not. I would ask a realtor or lender- especially if there is something you can put in the divorce paperwork or other docs.

[madisen]

Generally because you are on title (within the last 3 years) you would not be considered a first time homebuyer by fnma, fhlmc, fha, or lenders.

If you don't buy a property or go on title of a property for 3 years after you quit claim you can regain first time homebuyer status.

However there are certain exceptions to the rule and divorce can be one of them. This is the type of question I'd need to research at work and possibly contact some investors for clarification and confirmation. I can get back to this thread tomorrow if you want.

[madisen]

Also though, what are you looking for that you think you would benefit from or need first time homebuyer qualification as it may be a moot point.

[Deleted]

Thank you Madisen. I'm exploring all of my options including IRA early withdrawal penalty waiver and FHA loan. Rent vs buy. How to find 20% down vs PMI. etc. My credit is excellent; it's the lack of a substantial down payment I'm worried about.

[madisen]

You don't need to be a first time homebuyer for a traditional fha loan which requires a minimum 3.5% down pmt.

I'm not here to discuss how much you should put down on a house or what's better right now rent vs own. But unless you were looking for a special down payment assistance/bond program or the new FNMA 3% down program that require first time homebuyer status with good credit and low debts you should qualify just fine with 3.5% down and an fha loan or 5% down and a conventional loan.

[tealblue]

Feb 1, 2015 19:22:57 GMT -5 @blushnbashful said:

Thank you Madisen. I'm exploring all of my options including IRA early withdrawal penalty waiver and FHA loan. Rent vs buy. How to find 20% down vs PMI. etc. My credit is excellent; it's the lack of a substantial down payment I'm worried about.

I'm reading the IRS guidelines and it looks like you would not qualify since you were on the deed to the house. What I am reading said if you had no ownership interest in the last 2 years, you would be a 1st time buyer.

There are still tax implications if you withdraw from a 401(k) but if you met the homebuyer requirements, you wouldn't have an early withdraw penalty.

I don't think you need a substantial downpayment but I would shoot for 5% so you could get a conventional mortgage (likely with some PMI).

[madisen]

The FNMA exemptions for divorce are displaced homemaker and single parent only. This is to qualify for their new 3% down program for first time homebuyers.

So that wouldn't be available to you but the standard of 5% down for a conventional loan is.

First time homebuyer status really comes into play on bond programs and down payment assistance programs which it doesn't seem like you were going for anyway.

Good luck!

[Deleted]

Thank you!! Maybe PMI isn't so bad after all. I was going into this thinking PMI is the worst thing ever--even more so than cashing in some IRA.