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First Time Home Buyer Loans

The housing bubble has been all over the news recently. Housing foreclosures have gone up, prices have fallen, and fewer people have been buying homes. The government wants us to start buying homes again. If you are an American that is in the market to buy a new home, you might be able to benefit from the first-time homebuyer tax credit. Homebuyers that qualify and take out mortgage loans can receive a tax credit when they file their tax returns next year.

Who Qualifies for the First Time Homebuyer Tax Credit?

In order to qualify for the first-time homebuyer tax credit, you need to be a first-time home buyer that purchases a home between January 1st and December 1st, 2009. The date of purchase for this program is when the home closes, mortgage loans are in place, and the title transfers. To be considered a first time home buyer, you must not have owned a home for your primary residence in the last three years. If you are married, both you and your spouse could not have owned a home for the last three years. There is also an income limit for the tax credit. Eligibility for the tax credit phases out for single taxpayers earning $75,000 or more, and for married couples earning $150,000 or more.

The Credit is Refundable

The first-time homebuyer�s tax credit is refundable. If you are a home buyer that has a very low tax burden, this is good news for you. When you file your taxes, a tax credit is like free money. If you owe $5000 in taxes and get a $1000 tax credit, you will only owe $4000 in taxes. Because the first-time homebuyer�s tax credit is refundable, you can get the full amount of the tax credit that you are eligible for, even if you don�t owe that much in taxes. For example, if you owe $5000 in taxes and purchase a home for $80,000, you will get the full $8000 tax credit. You only owe $5000, so $3000 will be sent back to you as a refund. Home buyer�s will not get this credit when they take their mortgage loans out; they will have to wait until their taxes are filed in 2010.

Houses you can Buy for the Credit

You can buy any type of home and still get the tax credit. Both new and resale homes are eligible. You can hire a contractor to build a home for you. You can use the tax credit to buy a single-family detached home, manufactured home, condo, townhome, ore a houseboat. As long as the home is your primary residence, and you are not buying it from your spouse, one of your ancestors (mom, dad, grandparents), or one of your descendants (child or grandchild), the house qualifies.

How Much of a Tax Credit You can Claim

The first-time homebuyer credit is worth ten percent of the purchase price of the home, up to a maximum amount of $8,000. If you purchase a home for $80,000 or more, you can claim the full purchase price. If you find a home for less, you will get a smaller tax credit.

National Rate Averages

Mortgage Rates

Product Rate
5/1 yr ARM 3.147%
1 yr ARM 3.299%
15 yr fixed 3.221%
30 yr fixed 3.815%

Home Equity Rates

* Updated Jun 7, 2012