First time home buyers can claim a credit of up to $8,000 on their 2009 taxes for a primary residence purchased between January 1st, 2009 and December 1st , 2009. This program replaces the old $7,500 tax credit and unlike the old credit, this is a true credit that does not have to be repaid as long as the buyer remains in the home for 3 years.
Here are the highlights:
- Credit amount: 10% of the sales price of the home up to $8000. Any home purchased for $80,000 or more qualifies for the full $8,000 credit.
- Qualified homebuyers: Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
- Eligible purchases: Any primary residence purchased between 1/1/2009 and 12/1/2009.
- When: The credit will be available when you file your 2009 taxes (still some debate over whether it can be applied when you file your 2008 taxes). This credit will first offset any taxes you have due, and any remaining credit will be issued to you as a tax refund.
- Income limits: Anyone under $75,000 AGI (individual) and $150,000 AGI (joint) gets the full credit. The credit phases out between $75k and $95k individual and $150k and $175k joint.
- Recapture: If home is sold within three years of purchase, entire amount of credit is recaptured on sale.
FHA is back in vogue today with the extreme tightening of underwriting guidelines for conventional financing. FHA is much more liberal on credit score restrictions and generally provides a much lower monthly payment for those borrowers who are below a 700 middle credit score. Additionally, FHA provides a number of features which are simply not available on conventional loans such as allowing borrowers with a fairly recent bankruptcy to obtain financing as well as to allow a non-occupant co-borrower to be added to the loan.
Today, the area where FHA probably shines the most though is in condo financing. With a conventional loan, both Fannie Mae and Freddie Mac have made condo financing extremely difficult to obtain. Additionally, just this month they began charging 0.75 points for any 20 or 30 year condominium loan where the borrower does not put down at least 25%.
Please note that not every condominium will qualify for FHA financing. In the best case, the condo project that you are purchasing in will already be on the FHA approved projects list. How can you determine this? Simply follow the link below and slowly narrow down the search to determine if the condo you are looking at is on the list.
https://entp.hud.gov/idapp/html/condlook.cfm
If you find that your condo project is on that list, then you can stop there as you are in great shape. If, however, the condo project you are looking at is not on the list, you do still have the possibility that the unit you are purchasing can receive a “spot approval”. In order to make that happen, the FHA lender must certify that the condo project meets the eligibility criteria set forth by HUD. Using this checklist: https://www.franklinamerican.com/wiki/_media/public_extranet/wholesale_forms_general/condo_fha_spot_approval_checklist.pdf?id=public_extranet%3Awholesale_forms_-_ma&cache=cache the lender will perform an investigation on the unit in question. If the lender determines that the condo does meet the criteria, the unit will then be eligible for FHA financing.
Here are a few of the major restrictions to obtaining a “spot approval”.
- At least 90% of the units must have been sold
- At least 51% are owner occupied
- No single entity may own more than 10% of the units
- If there are more than 30 total units, then no more than 10% of the units may have FHA financing
- If there are 30 or fewer total units, then no more than 30% of the units may have FHA financing
In addition to the above, the unit in question must also meet the FHA requirements that are placed on any property - whether it be a single family, 2-4 family, or a condo. The appraiser will make this determination when he inspects the property.
Feel free to call us if you have any questions at all about FHA financing, or any other financing needs.
