A first-time homebuyer is an individual who (1) is purchasing the security property; (2) will reside in the security property as a principal residence; and (3) had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property. In addition, an individual who is a displaced homemaker or single parent also will be considered a first-time homebuyer if they had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period.
If a borrower discloses on the loan application that they have had a joint ownership interest in a principal residence with their spouse in the last 3 years, the lender is not required to consider the borrower a first-time homebuyer unless the borrower has provided the information necessary for the lender to make that determination. Acceptable documentation includes a divorce decree or similar evidence that the borrower no longer has an interest in that property and is now purchasing a new principal residence as a displaced homemaker and/or single parent. Otherwise, no additional analysis is required by the lender to identify the borrower as a first-time homebuyer for purposes of determining if homebuyer education is required under B2-2-06, Homeownership Education and Counseling. If a borrower discloses they have had an ownership interest in a residential property during the three-year period, the lender remains responsible for determining whether the borrower meets the first-time homebuyer definition when required for eligibility, such as purchase transactions with LTV, CLTV or HCLTV ratios of 95.01% to 97% that are not HomeReady mortgage loans.