First Time Home Buyer Tax Credit. – If you are buying a home for the very first time be advised that there are different first time homebuyer programs that are available to you. These programs will help you get your very first home at the best deal possible.
First time home buyer tax credit.
Regardless of how our economy is at the moment, now is the best time to purchase a home especially if it is your first one. The Obama’s mortgage program includes an $8,000 tax credit or 10% of the home’s price, whichever is lower, for Americans who are buying a home for the first time.
However, not everyone is eligible for this tax credit. A single homebuyer who makes more than $95000 a year or a married couple who jointly has a yearly income of $150000 will not be able to get the full amount of the tax credit. And a single buyer who makes more than $95K a year and a married couple who makes more than $170K are not eligible for the tax credit at all. However, if your income does not belong to any of the brackets mentioned above, then you are indeed qualified for the full amount of 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. This amount can be claimed on your next year’s income tax return. Be informed that you can get the full amount of the tax credit back even if the total of your federal tax liability is less.
Aside from the first time home buyer tax credit you can also avail of a Federal Housing Administration Loan.
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. Again, not everyone qualifies for this program. In order to be eligible for this loan, your monthly mortgage payments after you have purchased the home should not be more than 29% of your 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.
Major creditors usually have a special package for first time homebuyers. Included in the package is a considerably lower down payment. At least less than the conventional 20% down payment required by most lenders. Other creditors who will not give you a lower down payment offer a program where you can get a piggyback loan for you to be able to reach the required traditional 20% down payment.
Usually, if you apply for a loan that has a down payment which is less than the traditional 20% of the purchase price of the house, you would be required to get a Private Mortgage Insurance. 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.
