First Time Home Buyer Tax Credit. - Buying your first home? Know that there are available programs for first time home buyers that you can take advantage of. These programs will help you get your very first home at the best deal possible.
First time home buyer tax credit.
This is an ideal year to buy a home for first time buyers. With the Obama mortgage program, you can avail of the Eight Thousand Dollar Tax Credit or 10 percent of the home’s purchase price, whichever is lower.
However, not everyone is eligible for this tax credit. For single home buyers who have an annual income of more than $95K and a married couple who makes more than $15K, they will not be able to get the full amount of the refundable tax. And those who are not eligible for the tax credit at all are single homebuyers who make over $95000 dollars and married couples who have an annual income of more than $170,000. So if you have an income of less than what is mentioned above, you are qualified for the tax credit.
So if you purchase a home now, eight thousand dollars or 10% of the purchase amount of the home you are considering to buy should be fully refunded to you. You can claim this amount on your next tax return if you buy a home this year. Even if the amount of your federal tax liability is less, the total amount of the tax credit should be refunded.
Federal Housing Administration Loans.
The Federal Housing Administration offers loans to homebuyers that require a down payment of about 3 and a half percent of the cost of the house. Unlike a conventional loan which would require at least 20% down payment. This kind makes purchasing a home for the first time significantly more affordable. This is just yet another mortgage program of the government to make it more affordable for everyone to own a home. But there are some limitations to this program. For one to qualify for this kind of loan, one’s monthly mortgage payments after the purchase should not exceed 29% of his/her monthly gross income. Also, you need to have a good credit score to be approved for the loan.
If you are not eligible for the programs mentioned above, there also are some special loans available for first time home buyers.
Many lending institutes offer special packages for people who are buying a house for the first time. Included in the package is a considerably lower down payment. At least less than the conventional 20% down payment required by most lenders. And those who stick to the 20% down payment, may offer a piggyback loan for clients to be able to afford the conventional first installment.
You are required, however, to purchase a private mortgage insurance if you are applying for a special package loan to buy a home. This is required by creditors for them to use as security in the event that their borrowers suddenly default on their payments. Not to worry, though, the insurance usually just costs about 0.5% of the mortgage amount of the home per year. Most creditors would allow you to cancel the insurance once you have paid off at least 20 percent of what you owe.
So before you sign any agreement in purchasing a home, make sure that you have studied all your options and privileges as a first time home buyer. If you take advantage of the programs mentioned above, you would have saved a couple of thousands of dollars, which can increase your savings significantly. Also, check out your state’s federal program. Some states in the US offer additional grants that can help in making your first time home even more affordable.