If you are a first time homebuyer and your gross income is below your specific county’s Area Median Income (AMI) limit, did you know that you qualify for some pretty attractive interest rate incentives? It can usually result in savings of approximately .5% to .875%, depending on the loan and property attributes.
Q: What is a first time homebuyer?
A: The definition of a first time homebuyer is a person that has not owned a home in 3 years or more. If you are a first time homebuyer looking to purchase with a partner that is not a first time homebuyer, then you can be on the loan solely to secure a lower interest rate, as long as you qualify on your own.
Q: How can I find out what my county’s income loan limits are?
A: Right here, although this is something your lender/broker should be on the lookout for on your behalf and advise accordingly. Do note that even if your total gross income includes bonus, overtime or RSUs, if you qualify just with base, then we can omit those “extras” and get you that rate incentive.
Q: Do these rate incentives apply to all loan types?
A: Unfortunately, no. These are for conventional loans only, purchased by Fannie Mae and Freddie Mac, so you are limited to your county’s high balance loan limit.
If you live in a high cost county, then you need to be under the 120% AMI threshold; in other counties, you need to be under the 100% AMI threshold. These rate incentives serve to support first time homebuyers and make mortgage financing more accessible to potential homeowners that feel priced out of the market. What do you think?
