Single First Time Home Buyer Applying For PHFA Tax Credit Advance

First Time Home buyers in Pennsylvania who plan to use the Keystone Home Loan and the Keystone Home Loan Plus Programs for a home purchase may now qualify for the PHFA Tax Credit Advance Loan Program. The PA Tax Credit Loan Program is designed to let PA First Time Buyers to take advantage of the Federal First-Time Homebuyer Tax Credit in a way that let’s them borrow money against the $8000 Tax Credit they are due. The PHFA Tax Credit Advance Loan Program is offered by the Pennsylvania Housing Finance Agency.

Why PHFA Authorized The Tax Credit Advance Loan Program?

Only first-time home buyers can qualify for this federal tax credit. These first-time buyers are eligible for an $8000 tax credit. This tax credit is paid through the 2010 tax return if the house was purchased in 2009. This Advanced Loan Program enables buyers earlier accessibility to their tax credit, due to the actions of the PHFA, intending to better serve Pennsylvania home buyers.

This PHFA tax credit advance loan program is not guaranteeing anything, but is intended not to require any loan payments or interest charges until June 2010. This should allow enough time for the home buyer to receive his 2010 tax credit refund and then use the funds to repay this PHFA advance loan before any payments or interest is due

PHFA Tax Credit Advance TCA Loan Program Guidelines

1. The TCA Program only applies to first-time buyers getting a PHFA first mortgage through the Keystone Home Loan and the Keystone Home Loan Plus assistance programs.

2. It can be used through PHFA Access Modification Program and the Purchase Improvement Program, which are special mortgage plans.

3. In actuality, the TCA is a lien against the house which must be paid off when the homeowner sells or refinances.

4. The minimum loan amount is $500, but the TCA can be either 10% of the home’s sales price up to $6000 for a newly built house and a resale house up to an amount of $5000.

5. Those PA homebuyers wanting to take advantage of a TCA loan must be occupants in the acquired home.

6. There’s no interest fee or loan payment due until June 2010. If the TCA is not repaid by that date, then the TCA converts to a 10 year loan and the interest percentage the same as that of the first mortgage.

7. This TCA cannot be used with any of the other programs which offer closing costs and down payment assistance.  These include Keystone Assistance Loan, HOMEstead, or the Access Downpayment and Closing Cost Assistance Programs.

8. Time extensions for paying back the TCA by June 2010 are not granted. The interest free and no payment due conditions end at that specified date.

9. The TCA is not allowed in any arrangement when buying a home from a parent or other family member.

There are requirements for income and house sales price which are dependent on the federal tax credit income guidelines or where the PHFA income and purchase price guidelines apply. This choice depends on whichever is more limited or restricted.

New Home Owner

In the State of Virginia those first time home buyers looking to buy a home for the first time and are short on cash for a down payment or closing costs can use a new mortgage loan program through the Virginia Housing Development Authority (VHDA).  This loan program is referred to as a Home Buyer Tax Credit Plus Program.

This program helps qualifying first time buyers who may have less money available for down payment and closing costs.  The Virginia Home Buyer Tax Credit Plus Program is especially helpful in getting a state mortgage loan in advance of receiving the $8000 home buyer tax credit. The $8000 first time home buyer tax credit was first authorized by the Obama Administration in early 2009 which replace the $7500 home buyer tax credit authorized by the Bush administration in 2008. More information on the $8000 tax credit.

There are certain details and specifications included in this Virginia Home Buyer Tax Credit Plus Loan Program.  They are as listed below:

1. This program, which is associated with the IRS $8000 tax credit, will end December 1, 2009.

2.  If there is a second mortgage, the first year’s interest rate is 0% and no payments are due on this second mortgage the first year of the loan.

3.  There is a limit up to 5% of home’s purchase amount on the second mortgage and the first and second mortgage loans must be combined when using a first mortgage program from the VHDA.

4.  Specific income and house cost limits are dependent on property location.

5.  The ones applying to borrow must be a first time home buyer.

6.  Another consideration is a personal credit score at least as high as 620 for the home buyer.

7.  It is necessary to have 1% of the sales price, in personal funds, in order for qualification for buying a house.

When needing further information on Virginia Housing for the first time home buyer and assistance with down payments program, contact: Down Payment Assistance and First Time Home Buyer Programs in Virginia.

Key Components of the $15,000 Home Buyer Tax Credit Act of 2009

• Eliminate the income caps of $75000 and $150,000 that the current American Recovery and Reinvestment Act of 2009.
• Expand the home buyer tax credit from $8,000 to $15,000.
• Open the home buyer tax credit to any home buyer, not just first time home buyers as the current home purchase tax credit stipulates.
• Extend the time frame that the tax credit is in effect to somewhere near the end of 2010 depending on when the bill is passed (if it gets passed). The bill suggests that it be in effect for 1 year from its approval into law. The current first time home buyer tax credit runs out on November 30, 2009.

Still to be determined is whether the tax credit will be allowed to be given to the home buyer at the time when they buy their home. Many of the bills supporters suggest that home buyers need to get their hands on their tax credit at the time of their mortgage closing to ensure that the tax credit will have the maximum impact on the housing and economic recovery.

As it stands now, the home buyers tax credit is not collectable until tax time in 2010, long after the time has ended when home buyers can qualify to receive their tax credit by purchasing a house.

First Time Home Buyers Celebrate FHA Tax Credit Policy

HUD and FHA have posted new guidelines to the much anticipated policy regarding how approved lenders and approved non-profit entities can give home purchase tax credit short term bridge loans to allow first time home buyers to take advantage of their home purchase tax credit authorized by the Obama Stimulus Plan.

More importantly, FHA has issued an additional program that allows qualified organizations – lenders and non profits – to purchase the anticipated home buyer tax credit from qualified first time home buyers in advance to allow the home buyer to use their tax credit for their first home purchase. This program is called the FHA Tax Credit Purchase Program (see below for specifics).

FHA Tax Credit Purchase Program

FHA approved mortgage lenders and FHA approved non profit organizations and other Federal, State and local governmental agencies can purchase the first time home buyer tax credit in advance of when the home buyer files for it in their 2009 tax return in 2010.

To be eligible for the Tax Credit Purchase Program

• The proceeds of the sale of the tax credit may not exceed the anticipated tax credit due the home buyer as laid out by the IRS in their filing instructions.
• The home buyer must sign a certification that the tax credit is not subject to offset other indebtedness.
• FHA allows the lender to charge a fee not to exceed 2.5% of the tax credit due to the home buyer for fees and expenses incurred to set up the tax credit purchase.

FHA Tax Credit Bridge Loan Guidelines

FHA will allowed approved FHA lenders and other approved entities to offer a second lien, second mortgage, short term bridge loan, commiserate with the amount of the expected first time home buyer tax credit due to the home buyer. Below are the general guidelines.

• The bridge loan, second lien cannot be in an amount great enough to exceed that the home buyer needs for down payment and closing costs such that the home buyer gets cash back at settlement.
• The bridge loan, second mortgage must be a “soft second” which means there will be no monthly payments required for at least 3 years.
• If payments are required at all, then they cannot start until 3 years after the second lien is issued.
• Required payments shall not be calculated in the home buyers overall debt to income qualifying ratios.
• If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a “soft” second.
• The home purchase tax credit secondary financing loan cannot have a balloon payment that calls the loan maturity before 10 years.

Tax Credit Filing Options

First time home buyers are eligible for up to an $8000 tax credit for buying their first home. However, those who qualify for this tax credit are not able to get the money until their 2009 tax return is filed in 2010 – which is long after the time when the home is supposed to be bought to qualify for the tax credit. So the tax credit cannot be used for the down payment – which leaves many first time home buyers still scrambling to come up with enough money for their down payment. See $8000 Home Purchase Tax Credit for more information.

It is not well known, but the IRS has set up some ways for qualifying first time buyers to get access to their tax credit shortly after settlement versus having to wait until next year. This could make getting a short term loan from a parent or relative a way to get a down payment in order to qualify for a FHA home loan.

$8000 Home Purchase Tax Credit Filing Options

The IRS explains 4 filing options to allow first time home buyers quicker access to their home purchase tax credit.

File Now Amend Later – If you need to file your taxes for 2008 file them in 2009 as normal even if you are considering buying your first home. You can always go back and amend your tax return and claim your tax credit later. If you do it this way, it is likely, says the IRS, that you will receive your tax credit in a few weeks after filing an amendment.

File An Extension – If you haven’t filed your extension by now, it may be too late for this option. If you have filed an extension and you are looking to buy your first home you can file your return immediately after you purchase your home and get your tax credit within about 10 days of filing. This is a better option if you want to get your tax credit before you have to file your 2009 return in 2010.

Amend Your 2008 Tax Return – If you have already filed your 2008 taxes in 2009 and you purchase your first home before Dec. 1, 2009 then you could file an amendment. You do not have to do this if you do not need the money, but if you do not want to wait until your file your taxes in 2010 then an amendment may make perfect sense for you.

Claim The Tax Credit On Your 2009 Return and File in 2010 – You may not need the money. If this is you, then you may just file for your tax credit in your 2010 tax return filing of your 2009 taxes.

Our advice is to talk to your tax adviser for the best tax credit filing options for your financial situation. Ask them about your options to qualify for the first time home buyer tax credit and happy house hunting.

Tax Credit For First Time Buyers Bridge Loan

Please refer to our post: Will FHA Offer Short Term Bridge Loan For The $8000 Housing Tax Credit Or Not?. In this post we suggested that the early interpretive ramblings people have been making about FHA pulling their mortgagee letter: Mortgagee Letter 9-15 may be falsely pointing at FHA’s retraction of HUD Secretary Shaun Donovan’s pre-announcement of a short term bridge loan to allow first time home buyers to monetize their $8000 home buying tax credit. It now seems as though our assessment is accurate.

According to a report by the Seattle Post-Intelligencer real estate reporter: Aubrey Cohen HUD Spokesman Lemar Wooley reported that “the Arizona story is wrong. Nothing has changed. We are just waiting for the technical details to be finalized.”

Speculation About The FHA – HUD Short Term Bridge Loan “Technical Details”

• Some of the technical details may be that FHA approved lenders and other approved entities may offer tax credit short term bridge loans collateralized by the home versus the promise of the housing tax credit that the first time home buyer is due on their 2010 tax return. This is speculation, but it could be what FHA is working on.

• Another take on the details could be that in fact FHA underwriting guidelines are being modified to allow additional more flexible sources of down payment. With looser FHA guidelines, the expected first time home buyer tax credit could be used as a form of collateral for the short term bridge loan. As of current guidelines, a loan on real property collateral is an acceptable source of down payment. Real property collateral could a house or car that the borrower owns.

Again, we will keep you posted as new developments on this story roll out.

Is The FHA Short Term Tax Credit Bridge Loan A Reality?

According to a newspaper article in the Arizona Republic, written by Craig Anderson, the announcement by HUD Secretary Shaun Donovan last week at the NAR Real Estate Summit regarding a soon to be released program by FHA to allow approved FHA lenders to issue tax credit short term bridge loans has been rescinded. But has it?

There was a mortgagee letter issued by FHA, Mortgagee Letter 9-15, that pre-announced the home purchase tax credit short term bridge loan for first time home buyers, that can no longer be found on the FHA website. So it seems the interpretation of the withdrawal of the letter is that the program announcement by the HUD Secretary was premature to perhaps just plain ole wrong. But is this a fair conclusion of facts or just another news hype?

The issue that everyone seems to be barking about is the terminology in the mortgagee letter that suggested that the short term bridge loan is collateralized by the expected housing tax credit that the home buyer will get in their 2010 tax return. In this structure, the money coming in the bridge loan cannot be used for the down payment or closing costs, unless the home buyer had their own source of funds sufficient to cover the money they would get with the short term loan.

So what. Change the mortgagee letter to have the short term bridge loan be collateralized by the home being purchased just like how just about all of the down payment assistance programs work in the US.

What is more important than whether the program is coming or is not coming is the fact that the home buying market has never been greater and people sitting on the fence about whether they should buy or not should get off the fence.

The home purchase tax credit to which the short term bridge loan program is directed has a short term window for people to take advantage of it. According to the American Recovery and Reinvestment Act of 2009, first time home buyers have until 11/30/2009 to purchase a home to qualify for the $8,000 tax credit.

If a first time home buyer does not have enough money for their down payment but they can qualify for the $8,000 home purchase tax credit, then they should make arrangements to get a gift from a family member or relative, draw upon some of these other sources for down payment.

Time is running short.

To get perhaps the best home purchase and mortgage deal possible a few things need to line up in your favor.

• You will need enough cash to cover 3.5% down payment and your closing costs. But it all depends on what your credit scores are. Are your scores less than 620? If so, then you will want to improve your credit scores to put yourself in a position to buy a home as a first time buyer with an FHA home mortgage.

• You need to be a first time home buyer.

• You will need a minimum credit score of 620 to qualify for an FHA home loan. This is perhaps one of the best first time home buyer loan programs in US history. If your scores are under 620 you will need to do some work on your credit report to improve your scores.

• You need to purchase your new home in 2009 before December 1 to qualify for the $8000 tax credit.

Here’s the big question you may be asking from this list:

If I do not have the money for down payment then what are my options? Your options are varied, especially if you decide to try to qualify for an FHA mortgage program.

Your down payment and closing costs can be given to you in the form of a gift from a relative. You can also borrow the money for your down payment and closing costs. Just make sure that if you decide to borrow the money that you coordinate the terms of the loan allow you to still qualify for your mortgage. Work closely with your loan officer or housing agency counselor to make sure you still qualify if you have to borrow the money.

Perhaps the best place to get money for a down payment and closing costs is from the $8000 home purchase tax credit that is available for first time home buyers from the US federal government. FHA is rolling out plans to allow this tax credit to be advanced to you in the form of a small tax credit short term bridge loan. If you take advantage of this short term tax credit bridge loan then you will be expected to pay the loan back in 2010 when you get your tax refund that contains your tax credit.

Stay tuned for more updates on the status of the $8000 home buyer tax credit and the short term bridge loan as program details roll out.

First Time Home Buyer Family With FHA Home Loan

FHA Home Loans will soon be that much better for first time home buyers as HUD and FHA plan to initiate short term bridge loans to allow first time buyers to take early advantage of their $8000 home purchase tax credit that the Obama administration authorized with the American Recovery and Reinvestment Act of 2009.

Program details of the FHA home purchase short term loan have not been completely rolled out, but the short term financing program will likely be tied to the deed of the property being purchased and the home buyer’s housing tax credit that they will be eligible for when they tile their 2009 tax return in 2010.

The American Recovery and Reinvestment Act of 2009 provides for a home purchase tax credit for first time home buyers who purchase a home in 2009 between January 1, 2009 and November 30, 2009. First time buyers must meet other qualifications to take advantage of the full $8000 tax credit. Details of the home purchase tax credit plan can be read at GetPreQualified.com in this article: $8000 Tax Credit For Buying Your First Home.

According to HUD and FHA, first time home buyers are those buyers who have not had an ownership in a home in the past 3 years. This applies to a single home buyer as well as a married couple where neither spouse was a home owner from a prior marriage.