3 thoughts on “Do All First Time Home Buyer Loans Have the 5 Year Clause?”

1. No, just ones that have a recapture clause. You must be getting some sort of down payment help. If you leave early, they will “recapture” a part prorated on the time you have been there. It’s probably forgivable at 1/60 every month. You can sell the house for how ever much you want, but if you leave before 5 years, the recapture part will be taken directly from your proceeds.

2. Are you referring to a re-capture clause? Rural Development?
   If so then if you sell before 5 years they take back a prorated amount of what they “granted” you.

3. pontooner’s answer is pretty much right on. You must be getting some type of grant or subsidy program. These do often have some strings attached, as you are result out.

   That being said, if you can qualify to get the funds, it’s generally worthwhile to take them, even if there’s a potential recapture.

   They do this in part because one of the main goals of these programs is to make stability in the neighborhoods in which they make these funds available. Having people go out every two years is not what they want. They want people committed to moving there, staying there, and building the community from within.

   There are often some “means” tests that are applied if and when you sell (or even refinance), where sometimes you don’t have to repay the capture, like if the property value decreased, if you still don’t make much money, etc…

   It’s not predestined to be a hardship, just a minor deterrent to people trying to get the funds for the incorrect reasons.

   Talk to your loan officer or the agency that is providing the funds, and get them to clarify all the risks and rewards until you have a clear, satisfactory understanding. That’s their job.