First-Time Homebuyers Get Much Lower Rates, Unless….
Real Estate Agents — Here are some extremely important reminders about first-time homebuyer interest rates.
I have been in the mortgage industry since 1994, and for 25+ years, I would get asked all the time if I had special programs for first-time homebuyers.
And — I never had much to offer — until November of 2022. That is when Fannie and Freddie announced that they would waive almost all fees or price adjustments for first-time homebuyers. These price adjustments were for a variety of factors, but here are the big three: (1) credit score, (2) down payment percentage, and (3) property type (condos).
The Rate Quote in My Blog Every Day Is for a First-Time Homebuyer (Assumptions)
The conventional (non-FHA) rate quote at the bottom of my blog every day has the following assumptions: Condo purchase, $750,000 price, $712,500 loan amount, 5% down payment.
The rate for a first-time homebuyer would be 6.875% today. But — if a non-first-time homebuyer bought that same property with the same assumptions, the rate would be at least 7.5% today. That is a 5/8% delta between first-time homebuyers and non-first-time homebuyers, but I have seen it close to 7/8% on some days.
Lenders Advertise First-Time Homebuyer Rates
Lenders, of course, want to put their best foot forward when advertising rates, so they often assume the buyer is a first-time homebuyer.
This is extremely important to remember because agents will often ask us why the rate is “so high” for a particular borrower.
And it is either because the borrower is not a first-time homebuyer, or because the buyer does not qualify for first-time homebuyer fee waivers.
This happens multiple times every week, in fact (which is why I am typing this blog).
Why Do Many First-Time Homebuyers Not Qualify for Fee Waivers?
Many first-timers don’t qualify because they exceed the income limits for a particular area. In “high cost” areas, like much of coastal California, the income limit is 120% of “Area Median Income.” In most other areas, like most of Texas, Arizona and Florida, the income limit is 100% of “Area Median Income.”
So, for a high-cost area like Alameda County in CA, for example, the income limit is $201,720 (and surprisingly few couples buying a home in Alameda County for the first time are below that limit).
For a county like Dallas County in Texas, though, the income limit is only $113,500. For Maricopa County in AZ, the income limit $109,600.
So yes, a lot of first-time buyers do NOT qualify for the fee waivers because their income is too high.
Agents can easily check income limits .
Reminder About FHA Loans
As a reminder, FHA loans offer much lower interest rates than conforming (Fannie/Freddie) loans. But, FHA has NO first-time homebuyer requirements or fee waivers.
My FHA rate quote at the bottom of my blog is 5/8% lower than the rate quote for my conforming/conventional loan.
BUT, if that conventional buyer were not a first-timer, the FHA rate would be 1.25% lower!
Originally published at on May 21, 2025.
