Here's a handy link to find answers to questions about the $8,000 federal tax credit for first-time home buyers. (Note that a "first-time home buyer" is anyone who has not owned a principal residence during the three-year period prior to the purchase.) Learn more about this component of the American Recovery and Reinvestment Act of 2009 at Federal Housing Tax Credit for First-Time Home Buyers: Frequently Asked Questions.
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Comments: 16
Legislation was just introduced in the Senate yesterday to raise this to $15,000 with no income cap.
Wow. That would be amazing. Thank you for the update Bob. I for one would like the program extended through 2010 as well. It's not so easy to come up with the down payment required unless you're already sitting on money, or have a year to save.
You're very welcome. I agree, it would be great to extend it through 2010. Some mortgage companies are allowing borrowers to bridge the current tax credit as part of their down payment.
RE: Some mortgage companies are allowing borrowers to bridge the current tax credit as part of their down payment.
Good to know. I'll check into that.
Having a portion of this toward a downpayment could be really interesting. Qualifying requires some degree of job stability, though ... a serious challenge.
If anyone has a link to any information in the news about the limits being raised to $15,000 I would like to see it. I coudln't find anything online.
As to your question Dana:
I went to http://www.gpoaccess.gov/bills/index.html and performed a search for the term "Federal Housing Tax Credit for First-Time Home Buyers" and it came up with 40 records (which you have to click through). However, I wasn't able to define that search by the dollar amount of $15,000. And the most recent bill posted there on this topic is dated January 19. So alas, we're back to where we started.
Bob?
Here's a link:
http://www.usnews.com/blogs/the-home-front/2009/06/12/will-the-8000-first-time-home-buyer-tax-credit-expand-to-15000.html
Thank you Bob!
I'll have to share this info with my nephew. He's looking into buying a house.
Right on Cynthia. Please do pass the word. This is a wonderful opportunity for anyone in the market to buy.
In regards to using the housing tax credit as down payment, I spoke with a real estate agent today who said that last week he received "three different emails from lenders saying that the bridge is going away." I have yet to verify that however.
But, he reminded me, "with zero money down, you don't need it."
Indeed, my own research has turned up that there are still zero-down home loans out there, believe it or not. They're not being offered by the banks. Instead, they're being offered by government offices nationwide. The U.S. Department of Agriculture has zero-down home loans for designated rural/outlying housing. State bond measures are being funded by zero-down loans to home buyers....
Meanwhile, the Federal Housing Administration makes loans for only 3 1/2 percent down (versus up to 20 percent). And there's a bonus with some of these government programs. Usually, less than 20 percent down required that the buyer also pay monthly premiums for mortgage insurance. With some of these government programs, that mortgage insurance requirement is waived.
That can equate to several thousand dollars per year that won't be coming out of these home buyers' pockets. For an argument as to why that may be good, see "What Is the Real Cost of Mortgage Insurance?" It's no different than the non-recourse loans that are offered in the commercial real estate industry. With a non-recourse loan, the lender's only recourse in the case of default is to assume ownership of the property. As to an argument as to why that may be bad, think really giant landlord if those foreclosed homes are then rented out.
OK. We can find ways to find bonus, rebates, and extra money in real estate transactions due to government bailout and other financial programs are appealing to us consumers, and I am not denigrating legitimate use of these programs. My push for personal responsibilities in our own lives suggests to me that I would not bend the rules and push the envelopes for home ownership.
My rules on owning a home and mortgage and personal responsibility are these:
1. Have no consumer debts (credit card, student loan, car loan, and other mortgage, etc.).
2. Have 3 to 6 months in expenses for a rainy day fund and in very stable jobs
3. Mortgage payment should be no more than 25% of monthly take home income.
4. 10% to 20% should be used for down payment.
Most of the people who are in dire financial predicament have broken at least one or more of these rules. Even those who follow these rules cold be in a highly risky situation if his/her income suddenly drops due to illness, disability, job loss, divorce, or death.
Welcome insight Jeff S. Indeed, it doesn't matter how good the deal is if you can't afford it. If you can't afford it, stay away.
I'm wondering, however, whether
a) up to $15,000 off an already less expensive home (this month reportedly marks the lowest in the real estate market drop), plus
b) state incentives like those offered in Michigan and Missouri of up to $15,000 more, plus
c) the savings on the dropped mortgage insurance requirement and
d) the low-interest loans offered by government entities and
e) home-savings-match programs like those offered with Individual Development Accounts (they'll give up to $9,000 towards the sale)
might just make home ownership less expensive that the current rent.
I absolutely agree with you that there are very appetizing and favorable programs out there for THE FIRST TIME HOME BUYERS. Unfortunately most first time home purchasers have one or two new car payments, student debt, and low income. Most first time home purchasers are afraid to make a big commitment due to their apprehension that:
a. their income may suffer in the future, or
b. they are too young to have saved up much money to buy a home.
Would you support decisions should made on new home purchase by the first time home ownership if these were the cases presented to you like:
1. Having multiple loans with no money saved up,
2. Having just come out of bankruptcy and buyers have no understanding of personal finance,
3. Two people with good combined incomes without being legally married, or
4. Living in a high unemployment area where the home prices are dropping like a rock.
Obviously most people are not so stupid to make these kinds of foolish choices, but apparently there were enough folks who signed up for the wrong trip in the last three years to cause this economy to go down like a rock. After all that, some first time home buyer simply may not qualify for a loan because of the lack of depth in their finances.
I am only suggesting prudence, conservatism, and using lots of common sense.
Great info Ms M thanks for sharing this!