More States Help First-Time Home Buyers Monetize Tax Credit
With the recent addition of Nebraska, Texas and Virginia, 13 states have now taken steps to monetize the $8,000 tax credit for first-time home buyers so that it can be used for downpayments and closing costs.
The other 10 states with programs are: Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania and Tennessee.
Among the provisions of the latest state initiatives:
- According to the Nebraska Investment Finance Authority’s Web site, first-time home buyers can get a second mortgage loan in an amount up to 85% of their expected federal first-time home buyer tax credit (not to exceed $6,800). The loan will be structured as a second mortgage, with the expectation that it will be paid by the borrower from their tax credit refund. If the second mortgage loan is repaid within 120 days of loan closing, the interest rate and monthly payment amount on the first mortgage will be reduced by a pre-determined amount.
- The Texas Department of Housing and Community Affairs provides two options for first-time home buyers: the 90-Day Down Payment Assistance Program and the Mortgage Advantage Program. While they both provide assistance of up to 5% on the first lien mortgage, the 90-Day program maxes out at $7,000 and the Mortgage Advantage Program’s limit is $6,000. Repayment times also vary for the two programs, at 90 days and 120 days, respectively.
- In Virginia, home buyers have up to a year to pay back the interest-free second mortgage provided by the Virginia Housing Development Authority (VHDA) based on a home buyer’s qualification for the first-time home buyer tax credit. The loan is up to 5% of the sales price and to qualify the home buyer must have a minimum credit score of 620 and participate in a free VHDA homeownership education class prior to loan approval.
The National Council of State Housing Agencies (NCSHA) has established an information clearinghouse on tax credit monetization programs for consumers and other state agencies. To read up-to-date information on these programs, click here.
For more information, e-mail Brooke Fishel at NAHB, or call her at 800-368-5242 x8061; or contact Robert Dietz, x8285.