FHA 203(b) Mortgage Insurance Loans – True or false: Banks have tightened down on loan requirements. This may be true but it doesn’t mean that you won’t qualify for a loan. There are many loan programs that make housing more affordable for everyone.

FHA 203(b) Mortgage Insurance loans are one of these programs. An FHA loan only requires 3.5% down and, unlike many loans, this can be a gift from a relative or a government grant. Your credit score doesn’t have to be perfect either. There is a lot of paperwork involved but loan officers can guide you through the entire process. Click here for more information on these loans. You can also search for an FHA lender in your area from this page.
http://www.hud.gov/offices/hsg/sfh/ins/sfh203b.cfm

First-Time Homebuyer Tax Credit – As you may know, the economic stimulus package included a tax credit for first-time homebuyers. This is not so much a new tax credit as it is a modification of the one created in July of 2008. The January 2009 version does have some significant advantages over its predecessor. Below are comparisons of some of the key changes.

Firstly, the maximum credit amount increased from $7,500 to $8,000. Notice the word “maximum”. The credit is the lesser of ten percent of the cost of the home or $8,000.

Secondly, the exclusion that applied to financing through state or local bond funding has been removed.

Thirdly, and this is a big one, the repayment and recapture clauses were changed significantly. Under the previous tax credit, the credit was actually more of a loan with a fifteen year term. If you sold your home before the tax credit was repaid, i.e. less than fifteen years after you purchased it, the balance owed on the tax credit was due at the time of the sale. Now, there is no repayment for homes purchased between January 1, 2009 and December 1, 2009. The only “gotcha” is that if you sell your home within three years of purchase, you have to repay the full amount of the tax credit.

That’s about it for changes. Other aspects of the credit remain the same. The credit still applies to any single family residence that will be used as the principal residence. The purchaser may not have owned a principal residence in the three years prior to purchase. The amount of the credit still reduces your income tax liability and any unused amount of the credit will be refunded to the purchaser when taxes are filed. There are income limits, too. Those limits are $75,000 adjusted gross income for single filers and $150,000 for joint filers. The credit phases out above those caps.

That is the first-time homebuyer tax credit in a nutshell. Combine that with the low mortgage rates and it is a great time to buy your first home. Consult your tax advisor or the IRS for all the details of the tax credit and the impact of mortgage interest on your income taxes. Click here for more information.
http://www.irs.gov/newsroom/article/0,,id=205416,00.html