Housing Counselor Certification (HUD) Practice Exam

Which scenario describes a homebuyer who would be ineligible as a first-time homebuyer according to most down payment assistance programs?

1. A client who has never owned a home before

2. A client who currently owns investment properties

3. A client who lost a home to foreclosure two years ago

4. A client who is receiving assistance from family

The correct answer is: A client who lost a home to foreclosure two years ago

The scenario that best describes a homebuyer who would be ineligible as a first-time homebuyer according to most down payment assistance programs is one where the client lost a home to foreclosure two years ago. Many down payment assistance programs define a first-time homebuyer not just based on whether they currently own a home, but also consider past ownership history. Generally, a person is considered a first-time homebuyer if they have not owned a home in the past three years. Therefore, since this client lost a home to foreclosure only two years prior, they still fall within that three-year window and would not qualify as a first-time buyer. In contrast, a client who has never owned a home before would clearly meet the criteria for first-time homebuyer status. A client who currently owns investment properties might not be considered a first-time homebuyer either, but the criteria can vary significantly between programs. Lastly, receiving assistance from family does not affect the homebuyer's status as a first-time buyer. The key aspect of eligibility for many down payment assistance programs is the length of time since the last homeownership, which in this case disqualifies the individual who faced foreclosure.