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.
This is an ideal year to buy a home for first time buyers. 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.
Unfortunately, not everyone qualifies for this program. 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.
If you are eligible, the $8,000 tax credit (or 10 percent of the amount of the home) is fully refundable. This amount can be claimed on your next year’s income tax return. 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.
With this kind of loan the only required down payment would be 3.5% of the purchase price 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. 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. And for one to get approval, he/she should have a good credit standing.
Special Loans for first time home buyers.
Major creditors usually have a special package for first time homebuyers. They offer a lower down payment that is less than the conventional 20 percent of the home’s purchase price. 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.
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. And usually by the time the borrower has paid 20% of the loan, creditors will allow the borrow to cancel the insurance.
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. There are various programs offered by private lenders and the government alike that will make your first home more affordable. 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.