$8,000 Worth of Great News for First-Time FHA Loan Homebuyers

In addition to the Obama mortgage and other homeowner relief programs, 2009 also brings with it a tax break for first time home buyers. If you are contemplating an FHA loan on your first home, there’s never been a better time to buy thanks to the $8,000 tax credit offered to those who qualify.

There’s nothing new about tax credits for home buyers, but the 2009 first time home buyer’s tax credit passed as part of the Obama stimulus package does have some important differences. Unlike the 2008 tax credit, the 2009 version does not have to be paid back to the government. This tax credit is not permanent—it is only good until December 1, 2009.

First-time home buyers aren’t instantly eligible for the tax break. There are a set of requirements you must meet in order to get the $8,000 tax credit on your first time homebuyer mortgage. Those requirements include “first time home buyer” status, naturally—but what does that mean?

In this case, first time home buyers are those who are purchasing a “primary residence” for the first time. Are you trying to get an FHA loan and interested in this tax credit? FHA loans require you to live in the property you buy, so if you are approved for an FHA loan you meet the “primary residence” requirement for the tax credit.

But this tax break is not just for those who have never purchased a home before. If you have not owned a home in the three years prior to the purchase of your new primary residence, you also qualify if you buy your home between January 1st, 2009 and December 1st, 2009.

The 2009 Federal Tax credit requires borrowers to make no more than $75,000 per year for single borrowers and $150,000 for married couples filing a joint tax return. Married couples filing separately get more leeway with their incomes—you have a higher income limit in these cases. There’s just one catch; married couples who want the 2009 tax credit must BOTH be purchasing their first home. If either spouse has purchased a primary residence in the last three years, the couple cannot qualify for the $8,000 tax break.

It’s important to know that simply having purchased property does not automatically disqualify you from this tax credit. If you have purchased a summer home or any other building that is not considered a primary residence—the place where you live most of the year—you may still qualify for the $8,000 tax credit. (Source FHA.Com /FHA Loan Articles News, updates, and explanations to keep you informed)

Why Should I Consider an FHA Home Purchase Loan?

There are many reasons for homebuyers to investigate an FHA home purchase. First time homebuyers should explore FHA loan options because it’s easier to qualify for an FHA home mortgage. Your loan is guaranteed by the government, making your application more attractive to lenders. Since the typical first-time FHA home loan applicant is young and in the early phases of their careers, chances are they still have student loans and other debt to content with; an FHA home mortgage often costs less and is more forgiving of youthful indiscretions with credit and payments.

FHA home loans don’t require a big down payment at closing time. For first-time homebuyers this can be a real plus; that typical borrower in the early stages of a new career often doesn’t have a lot of money set aside specifically for purchasing a home. The FHA mortgage requires a low 3.5% down payment, and that money can come from a variety of sources including HUD down payment assistance grants.

For first time buyers, closing costs are another issue that can be a financial drain; typical closing costs for FHA home loans are around 2% or 3% of the total mortgage. One advantage when taking out an FHA loan? FHA mortgage terms may allow you to build in closing costs into your mortgage.

FHA home mortgages aren’t just for first-time home buyers. FHA refinance loans can help people get out of toxic debt situations caused by sub-prime mortgages with interest rates that have spiraled out of control. Are you facing default or foreclosure on a conventional loan? FHA home mortgage refinancing is a godsend for those who want to keep their homes and prevent damage to their credit ratings. There are several ways to get into an FHA home loan for refinancing. The advantages include a low fixed rate mortgage guaranteed by the FHA, predictable FHA mortgage payments and lower interest rates for those who qualify.

The FHA also provides cash-out refinancing for those who need financing for things such as college or major home improvements. An FHA cash-out refinancing mortgage may offer lower interest rates than traditional home equity financing loans; you may qualify for one of two FHA mortgage plans which offer cash-out plans. One offers loan amounts for up to 95% of the appraised value of the home, another FHA refinancing loan offers amounts up to 85% of the appraised value. Each program has its own specific requirements and rules; talk to your lender to learn what your options are under FHA cash-out refinancing mortgages.

FHA mortgage loans should take up no more than 29% of your monthly income, and your loan officer will ask for verification of your income to make the calculation. While some people are able to get conventional loans using “stated income”, requirements for FHA mortgage products such as FHA refinancing loans require copies of your income tax returns to verify the actual amount of money you report to the government. If your job situation has changed since your last tax filing, you may be able to furnish proof of income through your new employer.

FHA home loans have requirements for income, debt-to-income ratios, maximum loan amounts and other details; each type of FHA loan is unique and must be applied for individually. Ask your lender for assistance in learning which FHA mortgage is right for you. If you aren’t satisfied with your current lender, consider getting applying for an FHA home mortgage at a new bank. Even if you have an existing home loan, you can explore your options with FHA refinancing someplace else. (Source: FHA.Com/FHA Loan Articles )