FHA Loans With $8,000 Tax Credits | Bay Area Home Loans and Government Financing

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FHA loans are back as good business. The Federal Housing Administration guaranteed almost 186,000 mortgages in June, a record tally for the agency, which has insured more than 34 million properties since its establishment in 1934. First-time homebuyers are in part driving the record push. Since late May, prospective purchasers have been able to use the $8,000 first-time homebuyer’s tax credit on FHA-backed loans. Part of the American Recovery and Reinstatement Act of 2009, the tax credit allows first-timers to pay for closing costs or even defray the 3.5 percent minimum down payment on FHA loans.

These long-standing loans continue to grow in popularity given the slumping economy and tight credit market. The FHA’s record performance in June smashed the agency’s old record of about 157,000 loans in October 2008. Before that, the record dated back to March 1994. “A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans,” Orawin Velz, associate vice president of economic forecasting for the Mortgage Bankers Association, said in a news release. “In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance.”

FHA loans represent an affordable avenue for many first-time buyers. Anyone who has not purchased a home in three years gets that “first-time” status. But there are some strings attached for buyers looking to capitalize on the new $8,000 tax credit.

Prospective borrowers hoping to offset their down payment costs must utilize a proper FHA-approved lender. Otherwise, that $8,000 can be put toward closing costs or shaving down interest rates. First-time homebuyers also must meet a handful of other criteria. There are income thresholds that exclude individuals who make more than $75,000 or joint filers who clear $150,000. At present, first-time buyers can also decide when to claim the tax credit – either for 2009 or by filing an amended 2008 return. About a dozen states have started offering bridge loans to help spark home buying. These low- and zero-interest loans have to be repaid when the tax credit is applied. The FHA has also begun offering tax credit advance for prospective homebuyers who do not want to wait.

Until Next time Here is to your success! Jason Wheeler 925-285-2172 | Come to a FREE Bay Are Event |

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