The combination of low prices and low interest rates is unusual and is not likely to happen again in our lifetime. Additionally, the government has created some great programs available only to first-time home buyers.

First Time Home Buyer $ 8,000 Tax Credit: First Time Home Buyer $ 8,000 Tax Credit:

The Housing and Economic Recovery Act was passed in late 2008. However, Congress expanded its provisions in the first weeks of 2009. While the money originally needed to be repaid, now it does not, and the credit increased from $ 7,500 to $ 8,000. If you don’t have a tax liability of $ 8,000, don’t worry – get the difference back as a refund! Is that how it works:

– Must be a first time home buyer (defined as not having owned a primary residence within 3 years prior to the purchase date).

– The house must be purchased between April 8, 2008 and before December 1, 2009.

– The credit is 10% of the purchase price up to a maximum of $ 8,000.

– To receive the full credit, your adjusted gross income must be $ 75,000 or less if you file an individual return or $ 150,000 for a married couple filing a joint return. The credit is phased out for AGIs between $ 75,000 and $ 95,000 (individual filing) or between $ 150,000 and $ 170,000 (joint filing).

– If your tax liability is less than the credit, you will receive a refund for the difference!

– You must live in the property as your primary residence for 36 months or you will be required to repay the credit.

– You must buy the house from an unrelated third party.

FHA loans:

Although FHA loans are not limited to first-time buyers, their low down payment requirement and easier underwriting standards make them ideal for most first-time home buyers, particularly in the loan environment. strict today. And the interest rates are very competitive. The FHA does not make the loan; they insure the lender against default. Therefore, many lenders facilitate your qualification.

And the FHA is a great loan product for first-time home buyers. The program is not limited to first-time buyers only, but is limited to buyers purchasing their primary residence. Investors cannot take advantage of the favorable terms of an FHA loan. What are those terms?

– You only need to put 3.5% of the purchase price as a down payment, and the money can come from a family member.

– It is easier to qualify for the loan. You may still be able to qualify for a loan, even if you’ve had credit problems or bankruptcy.

– Interest rates are competitive with conventional mortgages. (However, you should compare the interest rates of different FHA-approved lenders to make sure you get a good deal.)

– A buyer with credit problems can take advantage of much lower interest rates than a traditional sub-prime loan.

– You will be required to pay for mortgage insurance, which is charged as an initial premium of 1.5% to 1.75% of the loan amount and then as a monthly fee included in your monthly mortgage payment.

– Some closing costs or allowed credits can be added to the loan amount.

– You must occupy the property as your primary residence; however, there is no time restriction as with the Tax Credit.

– Approved condos and 1-4 unit properties qualify.

– The condition of the property must meet FHA guidelines.

– FHA loan limits apply. These will vary from region to region, but have recently been increased to make lending more practical.

FHA 203 (k) loans:

For properties in less than perfect condition, the FHA offers a rehabilitation program known as a 203 (k) loan. This program provides all the benefits to buyers of an FHA loan as described above, while also financing the cost of repairing and rehabilitating a property.

It’s a good program, especially for first-time buyers, because you can borrow the money you need for any repairs up front. And since you must use FHA-approved contractors and an FHA-approved inspector, you know the job will get done right.

– Property must be an FHA approved condo development or 1-4 unit property.

– You must occupy one of the units as your main residence. These loans are not available to investors or rehabilitators.

– You only need an advance of 3.5% of the final amount of the loan. For example, if your purchase price is $ 100,000 and your rehab costs are $ 50,000, you will need a down payment equal to 3.5% of $ 150,000, or $ 5,250. Don’t forget that this money can come from an immediate family member! (FHA loan limits apply).

Eligible upgrades

As a general rule, luxury items are not eligible. However, the homeowner can use the program to paint, add rooms or terraces even if the house does not need any further improvements. All health, safety, and energy conservation elements need to be addressed before completing any other general home improvement.

The 203 (k) program has been around for a long time. Many agents and lenders have turned away from it due to the complicated paperwork involved in the program. However, the FHA has simplified the process considerably and it is possible to close a loan in a normal period of time, often in less than 60 days.

Although there is additional paperwork and additional inspection fees, many of them can be built into the loan. And it provides a tool for a typical home buyer to take advantage of available offers on foreclosed properties.