First-Time Homebuyer

What Is a First-Time Homebuyer?

In everyday speech, a first-time homebuyer is someone buying their first home. In housing programs, the term is broader. Most federal and state programs define it as a buyer who has not owned a principal residence during the three years before the purchase. That means a person who owned a home long ago, then rented for several years, can usually qualify again.

How the Definition Works

Two federal laws set the template that many state and local programs follow.

Federal affordable housing law. Under 42 U.S.C. § 12704(14), the definition used for the HOME program, a first-time homebuyer is an individual and spouse who have not owned a home in the three years before buying. The statute adds three protections. A buyer may not be excluded because they:

• Owned a home with a spouse while a displaced homemaker (an adult who spent years working mainly without pay to care for a home and family, and who is now unemployed or underemployed);
• Owned a home with a spouse while married, if they are now a single parent (unmarried or legally separated, with custody of a minor child or pregnant); or
• Owned only a dwelling that was not permanently affixed to a foundation, or that could not be brought up to code for less than the cost of building a permanent structure.

Tax law for mortgage revenue bonds. Under 26 U.S.C. § 143(d), at least 95% of the proceeds of a mortgage revenue bond issue must go to borrowers with no ownership interest in a principal residence during the prior three years. Exceptions include homes in designated targeted areas, home improvement and rehabilitation loans, and one-time financing for veterans.

Individual programs can set their own rules, and lenders’ marketing labels may differ, so buyers should check each program’s definition.

Where First-Time Status Matters

Why It Matters for Workforce Housing

Where a workforce homeownership program is limited to first-time buyers, this definition decides who can use it. Survey data show first-time buyers making up a shrinking share of the market. The National Association of Realtors’ 2025 Profile of Home Buyers and Sellers, covering purchases from July 2024 to June 2025, found first-time buyers made up a record-low 21% of purchasers. Their median age, 40, was the highest NAR has recorded. NAR deputy chief economist Jessica Lautz tied the decline to a market “starved for affordable inventory.”

For practical routes into ownership, see Pathways from Renting to Owning.