The federal government gave many potential home buyers incentive to become homeowners earlier this year with an $8,000 tax credit for qualified home purchases through November 30, 2009. Now the Federal Housing Administration (FHA) has sweetened the deal. Instead of waiting to file their taxes to receive that $8,000 credit, qualifying buyers who use FHA loans can access the funds immediately through short-term bridge loans.Under the FHA program, buyers can add the amount of their tax credit to their 3.5 percent down payment, which is required for FHA-insured mortgages; use the money to help cover closing costs; or buy down their interest rate. According to Anthony Mendez, 2009 President of the Downey Association of Realtors, this new measure should meaningfully impact home sales and values. "Realtors have advocated monetizing the $8,000 tax credit and are excited about FHA's actions," said Anthony Mendez, president of the Downey Association of Realtors. "This program will increase housing demand, help reduce inventory and allow more families to achieve the dream of homeownership." The credit is available to first-time buyers and people who have not owned a home in the past three years, with certain income limitations. If the buyer is married, their spouse must also meet those requirements. Only certain people who purchase a primary residence - including single-family homes, condos, townhouses, and co-ops - qualify. Single buyers who earn up to $75,000 and married couples who earn as much as $150,000 may receive the maximum tax credit. The credit decreases for single buyers earning between $75,000 and $95,000 and between $150,000 and $170,000 for home buyers filing jointly. "A buyer's first step should be to contact a Realtor who can help them determine if they qualify for the tax credit under IRS guidelines and assist them through the purchase process," Mendez said. The buyer must occupy the home for at least three years to realize the full benefit of the tax credit. If the property is sold during the three-year period, the entire credit must be repaid upon sale. Mendez believes early summer will be a critical indicator of how home buyers are responding to the tax credit. "The home buying process takes time, and as word continues to spread about the credit, more buyers will likely take advantage of the tremendous opportunities in today's market and decide to become homeowners," he said. For more information about the $8,000 home buyer tax credit, visit www.realtor.org/taxcreditbasics.
********** Published: June 26, 2009 - Volume 8 - Issue 10