If this is you, count your blessings.  You have the perfect storm of great factors weighing in to make your purchase a great investment.  What is in your favor?  How about very low rates, a huge inventory of homes to choose from, and rock bottom home prices.  Not to mention the government kicking in a nice chunk of cash in the form of a tax credit.  

Combine all this with the low down payment of an FHA loan and you are doing very, very well. 

I’d say approximately 90% of our business over the last year or two has been first time home buyers taking advantage of present circumstances and using FHA loans to do so.  Even with everything working to your advantage, you still need an expert on your side to guide you through your options, make sure you get the best rate and terms on an FHA loan and to ensure you obtain your government tax credit (if you qualify for it).  Let us be that expert for you!  Call Today!!  We not only provide you with the best financing available anywhere, we take pride in working with first time home buyers by ensuring they have a very pleasant and professional experience from the first phone call through to the closing…and we help them with any questions or actions after closing.  Our service does not stop after the close.  We strive to have customers for life.  In fact, most of our business comes from referrals from satisfied clients and the realtors they work with.  Ask us about our We’ve Moved postcards.  A very popular FREE service we offer after the closing. 

At LoanMichigan, as you may have guessed, we ONLY DO LOANS IN MICHIGAN.  We are dedicated to helping the residents of this state help themselves to the best lending options in the country and utilizing all the resources available to them.  We are familiar with all the benefits and issues particular to lending in the state of Michigan. 

I’m sure you’ve heard enough about why you should be using us as your mortgage professionals and would like to hear a bit about the first time home buyer credit options.  So here goes…

First, the $8,000 credit for First Time Home Buyers

The tax credit of up to $8,000 has been extended for qualified first-time home buyers purchasing a principal residence.  The tax credit applies to sales occurring on or after Jan. 1, 2009 and on or before April 30, 2010.  One exception is if there is a binding sales contract signed by April 30, 2010.  In this case, a home purchase completed by June 30, 2010 will qualify. 

For sales occurring after November 6, 2009, the income limit of $125,000 for single taxpayers and $225,000 for married couples filing jointly. This is more flexible than the income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009.  For that time period, the limits are $75,000 for single taxpayers and $150,000 for married taxpayers filing jointly. 

It should be noted that the tax credit is equal to 10% of the purchase price and capped at $8,000. 

The definition of a “first time home buyer” is a buyer who has not owned a principal residence during the three year period prior to the purchase of the subject property.  For married couples, the rule is applied to both the homebuyer and his or her spouse (both must pass this test in order for either to get the credit). 

The IRS allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first time home buyer.  For example, if a parent jointly purchases a home with a son or daughter.  Also, ownership of a vacation home or rental property not used as a primary residence does NOT disqualify a buyer as a first time home buyer. 

Also new is a tax credit for the “move up/repeat home buyer”…

This tax credit is up to $6,500 for qualified existing home owners purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010).

Who is eligible for the $6,500 tax credit?

Qualified move-up or repeat home buyers purchasing any sort of home are eligible. 

What defines a repeat or move-up home buyer?

A person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date.  For married couples, this test is applied to both for either to claim the credit.  Repeat home buyers do NOT have to purchase a home that is more expensive than their previous home to qualify. 

How is the amount of the credit determined? 

Calculated as 10% of the home purchase price up to a maximum of $6,500.  Purchases of homes priced above $800,000 are not eligible for the tax credit. 

Are there income limits?

Yes.  $125,000 for single tax payers and $225,000 for married couples filing jointly.  There is a phase out whereas the credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits.  The phase out is reduced to zero credit with MAGI of more than $145,000 (single) and $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts. 

The information provided here provides basic answers and information about the tax credit.  If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation. 

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