B2-2-07, First-Generation Homebuyer Loans (05/01/2024)

A first-generation homebuyer loan is one in which each borrower meets the following requirements:

• Is purchasing the subject property,
• Will reside in the subject property as a principal residence,
• Has had no ownership interest (sole or joint) in another property during the last three years preceding the note date of the loan, and
• One of the following must also apply:
  • No parent of the borrower has had an ownership interest (sole or joint) in a property in the last three years preceding the note date of the loan,
  • The borrower has aged out of foster care, or
  • The borrower has been emancipated.

The identification of first-generation homebuyer loans is currently optional for lenders. However, if a lender chooses to do so, the First-Generation Homebuyer Certification (Form 1109) must be completed by each borrower who is applying for the loan. The lender must retain a copy of each completed Form 1109 in the loan file.

The lender may report SFC 886 when delivering a first-generation homebuyer loan to Fannie Mae. However, by doing so the lender must ensure that all borrowers on the loan have completed the certification and the certification(s) are in the loan file.