First-Time Home Buyer Tax Credit Ended but Help Exists
Looking for the first-time homebuyer tax credit? You may be thinking of the federal program implemented under the Obama administration. We hate to be the bearer of bad news, but it doesn’t exist anymore.
However, don’t despair: Other programs can help you get the first mortgage.
To learn what happened to the first-time homebuyer tax credit, and find where you could get help now for a first mortgage, read on.
The first-time homebuyer tax credit
In 2008, the Housing and Economic Recovery Act sought to encourage Americans to purchase homes by creating a tax credit worth up to $7,500 for first-time buyers. The next year, Congress increased the amount to $8,000. After that, the legislation changed a few more times, so depending on when you bought your home, the credit was either a true tax credit gifted to you, or it was essentially an interest-free loan that had to be repaid.
The tax-credit program ended in late 2010. While some people who bought homes before then can still claim the credit, Americans buying houses now cannot.
Other programs for first-time buyers
Although the federal tax credit is no longer available, there are other first-time homebuyer programs out there that make it more affordable to buy a home. The programs are typically offered by states, counties, and cities, and it can take a little research to find these options, which may include zero-interest loans, grant money to put toward a down payment, and tax credits.
Here’s an example of a program in Texas: The Texas State Affordable Housing Corporation offers two programs for first-time buyers — one for home buyers with low and moderate incomes, and one for teachers, firefighters, Emergency Medical Services personnel, police, correctional officers, and veterans. The programs offer down-payment assistance, and buyers can also apply for a Mortgage Credit Certificate, which is a special tax credit of up to $2,000 annually based on mortgage interest payments.
To find the programs that could provide help for the purchase of your first home, search a city or address on Down Payment Resource to see a list of what’s available. It’s also a good idea to find your state’s Housing Finance Agency and learn about the resources for first-time homebuyers.
Note that some programs have a maximum on income and property value in order to benefit lower-income buyers, and others require several hours of homebuyer counseling classes to qualify. Also, pay close attention to whether you’re required to repay the financial assistance or if it’s being gifted to you.
The article First-Time Home Buyer Tax Credit Ended but Help Exists originally appeared on NerdWallet.