If you’re interested in first time home buyer tax credit, 2015 is definitely an interesting year to be experiencing. That’s because this year, the bulk of first-time home buyer programs will be state and locally funded. This year’s 1st time home buyer should know better than to expect federal funding. However, if you plan on buying your first home this year, meaning, if you’re a low-income earner (or earn a moderate income), you will likely be able to access a loan from your state agency, or your local one, developed in partnership with housing unit developers, not-for-profits, and lenders.
How does the typical first time home buyer credit work?
Essentially, any first time home buyer tax credit program is designed to help you, the person buying their very first home, face the hurdles of this process with fewer challenges. This means you will receive access to actual funding, but will also benefit from some opportunities to educate yourself on how lending programs work. All tax credit programs for first-time buyers include one, or a combination of several, of the components listed below:
- More accessible lending terms, offered by state agencies and local lenders. First-time buyers are encouraged to buy a home via comparatively more lenient terms for their mortgage loans.
- Help with your down-payment. This means that you, as a first-time home buyer, will be able to access a mortgage loan with no interest whatsoever, as well as with the option to defer your payments. Both these factors represent substantial help, since most regular loans will frown upon a down payment that is less than 20 per cent of the home’s total value. Some programs also offer assistance with closing expenses.
- Education for first-time home buyers. This type of support may seem less valuable, but its noble goal, of educating you, as the consumer, to research the best mortgage loan you are eligible for, can actually go a long way.
Most programs will provide a combination of the above and specific conditions vary widely, from one lender to another, and from one tax credit to another. For instance, some lenders will offer you $3 for each dollar you pay, with a threshold to the total amount they contribute with. In order to be eligible for such home buyer assistance programs, buyers must typically make proof of the following:
- They have never owned a home – or have not owned one for the past several years.
- They can contribute to the upfront down payment with at least a minimal amount.
- They have undergone counseling and coursework on buying a home, borrowing money, mortgages, and other topics that relate to this.
- They fall within pre-determined income brackets. In 2015, this is probably the most important eligibility criterion, so if you earn a high income, you should forget about applying for such a program.
Although the federal government has contributed to encouraging home ownership via tax credit programs before, it is highly unlikely they will do so thus year. The last such program, the Housing Assistance Tax Act, was issued in 2008, under George W. Bush. Such assistance is incompatible with the current administration’s policies on housing – the White House is seeking to reduce its involvement at the moment.