First time homebuyer credit | FHA & conforming limits raised
The economic stimulus bill just signed into law contains two major items for 2009 homebuyers.
- The measure increases the first-time homebuyer tax credit to $8,000 and does away with its onerous repayment requirement.
- It also reinstates the 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans, which were FannieMae loans, generally higher than the ones that have been in place for 2009.
For existing homeowners who have put off making energy-saving improvements, the time to act is now. The law has kicked up the 10% tax credit for certain energy-related expenditures to 30%!
First-Time Homebuyer Credit
With the repayment requirement now ditched, the first-time homebuyer credit deserves a fresh look by potential firsttime buyers, many of whom were underwhelmed by the old credit with its 15-year payback.
The credit is 10% of the cost of a home, so a house costing $80,000 will be enough to qualify for the full credit. The credit is refundable, which means that the government will pay you the difference if your tax liability is less than your credit amount.
The credit is designed to encourage purchasers to stay for a while. If you sell the home or stop using it as your principal residence within three years of the date of purchase, the credit will be recaptured.
There is an income limit, above which you won’t qualify for the credit. You must have “modified” adjusted gross income (MAGI) of $150,000 or less if you are a couple filing a joint return, $75,000 or less if you’re single to get a full credit. You can still get a partial credit up to $170,000 MAGI (joint) and $95,000 (single) based on where your income falls within the $20,000 phaseout range.
What constitutes a “first-time homebuyer?”
It is a person who has not owned a principal residence in the three years prior to the date of purchase of the home for which the credit is being claimed. If you are a first-time buyer who bought on or after January 1 of this year, you already qualify for the credit.
If you haven’t bought yet, you have until December 1 (not the 31st!) 2009 to buy and get the credit.
Restoration of 2008 Loan Limits
The stimulus bill restores the emergency 2008 high-cost FHA and Fannie Mae/ Freddie Mac loan limits for the remainder of 2009. Those limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply.
For communities with particularly high home prices, there may be some additional help from the new legislation. The bill permits HUD to increase the loan limit for a “sub-area,” i.e. an area smaller than a county. These exceptions would also be capped at $729,750. © 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc.
August 3rd, 2009 at 12:59 pm
[...] get into a home with a downpayment of a home with 3.5%. And with the first-time homebuyer federal tax credit of $8,000 that buyer no longer has to be paid back (only good for sales closed before November 30), the timing for first-time buyers is perfect. [...]
April 14th, 2009 at 2:58 pm
[...] and permits. Consider also in the above example, if you are a first-time homebuyer, you would get $8,000 back as a tax credit so long as you purchased the home by December 1, 2009 effectively making your downpayment less than [...]