FHA Loans and the Tax Credit for First Time Home Buyers

Posted on November 9, 2009 by admin 
Filed under FHA First Time Home-Buyers, FHA Mortgagee Letters, FHA news · Tagged:

FHA lenders have been hoping the tax credit for first time home buyers would get extended.  President Obama signed HR 3548, the Worker, Homeownership, and Business Assistance Act of 2009, legislation which should help FHA loan applicants, but legislation which is likely to be re-done early next year.  The first-time homebuyer tax credit is for first-time purchasers could get as much as $8,000 in tax reductions if only they would please, please buy a home and buy one before December 1st. For homebuyers in 15 states, this was the last down-payment assistance program at least for home buyers in 15 states because the tax credit is considered a down-payment with FHA mortgage loans.

With December 1st soon upon us, the government responded in two ways it extended the deadline until April 30th AND it improved the benefit. What is did not do was increase the first-time write off to $15,000 from $8,000 as some in the real estate industry wanted.  The first-time homebuyer credit is no longer just for first-time homebuyers. The new FHA mortgage program has been expanded to include many current homeowners as well.

The FHA loan program for current homeowners has expanded guidelines: If you have owned a home for five consecutive years out of the last eight and purchase a new principal residence between November 7, 2009 and April 30, 2010, you can get a tax credit of up to $6,500.  One of the qualification factors under the 2009 credit was that you could not have an income of more than $75,000 if single or $150,000 if married. The new rule increases the income limits to $125,000 for singles and $225,000 for joint filers to get the full write-off.

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