Saturday, September 13, 2008

New FHA Loan Guidlines and First Time Buyer Credit Info

Here are two very interesting items for those of you considering buying a home in the near future.

If the property you are purchasing has a seller that will accept an FHA Loan, here is some of the highlights that you may benefit from:


Minimal down payment 3.5%
100% of the down payment can come from a gift from a relative
No minimum credit scores
No reserve requirements
Seller can give up to 6% in closing cost, pre-paid credit
Loans are assumable to a new buyer at current rates and balances
Allows non-occupying co-borrowers (parents, relative, friend, etc.)
2-4 unit buildings with minimal down payment

Current FHA Loan Limits 09/10/2008

1 unit - $410,000
2 units - $524,850
3 units - $634,450
4 units - $788,450

Another incentive to those who are buying their first home is the tax credit you can receive:

Use the term “tax credit” lightly, because it’s really a loan. First time homeowners will be able to take a $7500 tax credit (or 10% of the purchase price of the home…whichever is lower) on their 2008 returns, which must be paid back, interest free, over the course of 15 years. Here are the details:
· First time home buyers (those who have not owned a primary residence for 3 years prior to their home purchase) who purchase their home between April 9, 2008 and July 1, 2009 will be eligible for the tax credit.
· Singe taxpayers with modified gross incomes up to $75,000 and married taxpayers with a joint modified gross income of up to $150,000 are eligible for the full $7500. Above those incomes, the tax credit begins to phase out.
· This is a tax credit, and not a tax deduction, meaning that it is a dollar for dollar reduction on taxes owed, as opposed to a tax deduction, which reduces the amount of your adjusted gross income that can be taxed.
· The credit is refundable, meaning if you owe $2000 in taxes and take the $7500 credit, you will receive at $5500 refund.
· The credit must be repaid to the government over 15 years or when the house is sold. For those taking the tax credit in 2008, the first $500 payment would need to be made when the buyer files their 2010 tax return.
· This tax credit is basically an interest free loan.

This information has been supplied by RWF Mortgage