New Information For First-Time Homebuyers

I have gathered together information on the Housing and Economic Recovery Act signed into law in July of 2008.  A first-time homebuyer is anyone who has not owned a home in the past three years. If two people are purchasing together neither can have owned a home in the last three years.

Tax Credit

The Tax Credit pertains to homes that are purchased between April 9, 2008 and July 1, 2009.  The tax credit is an interest free loan of 10% of the property value, with a maximum of $7500.  The loan is to be paid back in 15 yearly installments of 6.67% of the credit amount ($502.50 per year) starting the following year.  This credit is a refundable credit which means it is tied to your income tax return.  For example, if the buyer owes $4500 in taxes, he will receive a refund of $3000; if he has paid withholding taxes over and above his tax liability, he will receive his allotted refund plus the $7500.

The refund is income driven.  Income limits to qualify for the full $7500  credit are maxed out at $75,000 for individuals and $150,000 for married couples.  Higher incomes receive a reduced credit.  People with incomes at or above $95,000 individually or $170,000 for couples receive no tax credit.  If you have questions regarding this, I would advise you to contact your accountant.

Loan Limit Updates

Conforming loan limits, including FHA have been raised from $417,000 to a maximum of $625,500 for high-cost areas.

Minimum Downpayment

The minimum downpayment required has been raised from 3% to 3-1/2%.  With FHA this can be a gift.

Downpayment Assistance Programs

As of October 1, 2008 all downpayment assistance programs such as AmeriDream and Nehemiah will no longer be available although sellers will still be able to pay up to 6% for closing costs.

Bottom Line

There are many homes for sale at great prices.  If you want to purchase a home, get pre-approved now and find a home you love!  Give me a call at 630-664-9472 for the names of some great loan officers if you are not already pre-approved and let's see those homes!