At this point almost everyone knows that as part of the housing stimulus program the federal government has given 1st time home buyers a tax credit of up to $8000 for the purchase of an owner occupied home or condominium.
This tax credit has been part of the American Recovery and re-investment act.
Massachusetts however, has just introduced a 1st time buyers tax credit program that can be applied to a down payment and closing costs!
Massachusetts joins a growing number of states that allow the tax credit to be used toward the buyers down payment on the home rather than waiting till they file their 2009 taxes.
The program was introducing in a joint effort between The Massachusetts Association of Realtors (MAR) and Mass Housing. Below is a detailed description of what 1st time home buyers need to know about the program.
To qualify for the Home buyer Tax Credit Loan Program, you mustHow it works
Eligibility
Other Information
A recent study from the National Association of Realtors found that 82% of all 1st time home buyers believe that their biggest obstacle to purchasing their 1st home is coming up with a down payment. This 1st time buyers program is designed to relieve this issue in order to create more buying opportunities.
MassHousing’s home loans feature safe and affordable fixed rates and include unique benefits such as MassHousing’s MI Plus™ mortgage insurance, which will help pay the borrower’s monthly principal and interest payments for up to six months in the event of a job loss.
Mass Housing mortgages offer competitive interest rates, low- and no down payment options, and discounted rates for lower-income borrowers. As a buyer you should check with your lender to make sure they are offering this program. It should be noted that not all lenders are involved with MassHousing loans.
I commend Governor Deval Patrick and others involved with this program as it should open up additional buying opportunities and increase 1st time buyer involvement in the Massachusetts Real Estate market.
One important note that must be mentioned is that the buyer must still have a minimum of 3.5% of their own funds! The tax credit can be used in addition to the 3.5% down payment but can NOT be used to make up any part of the 3.5%.
If you are not going to buy a home using the latest Masshousing loan, the chart below summarizes the current Federal 1st time home buyers 8k tax credit program. Remember a 1st time home buyer is considered someone who has not owned a home in the last three years.
One of the best resources that I have seen on the new 1st time buyers tax credit comes from The National Association of Home Builders website. It is located here at the frequequently asked questions about the home buyer tax credit.
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About the Author: The above Real Estate information on 1st time home buyer tax credits was provided by
Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.
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Great news Bill! Here in Raleigh they can use that tax credit as a down payment as well. If I'm not mistaken can't that 3.5% down payment also come from a loan from a family member or even an employer? First time home buyers couldn't find a better REALTOR® in MetroWest Mass than you - they'll be in good hands.
Bill--What a great program! I know many first time buyers in MN now struggling to pull together the funds for a down payment. Strong buyers but are just a bit shy of the required downpayment. You explain the new system very well...Hope many first time buyers head your way for more expert advice!
Pam - If I am not mistaken the 3.5% needs to be the buyers own funds. I have not heard that the down payment could come from a family member or employee.
Teri - This new 1st time buyer down payment program should help a few buyers get into a home or condo. I appreciate the compliments on the article.
That was a smart move from MA!!!
What a great opportunity for homebuyers to help in the purchase of a home! Hopefully this type of information will help them to understand it and take advantage of it!
I have my first one of these closing in NJ in a few weeks. (Found it on ActiveRain ...) In my case it is someone that has money, but is electing to do this just to keep more money in their pockets - and I would agree with that mentality.
Chock full of information! Love it. You are THE MAN Bill, and you stand out in your field.
Bill, This is a great move by your state of Mass, good to know they are taking a bold step in helping to get new buyers into the market. Your post is full of useful information for all types of buyers.
Maryland does not have the funds on any level to facilitate this program by December.
Bill - Kentucky implemented a similar program a few months ago. The primary difference is that the funds can be used towards the 3.5% down payment.
Hi Bill...This help stimulate your Business...Go Bill Go.
Great Post, have a great week!
Bill this is a good deal especially since they can get the money interest free if they pay it back before June 1, 2010.
Erik, and Lee & Pamela you should check on being able to use the $8,000 towards the 3.5% downpayment, because that would be in violation of FHA Guidelines, and states can not over ride those guidelines. However, it is still a great benefit to be able to get it ahead of time, and being able to use it toward Closing Costs.
Hi Bill, great post and a very smart move on Massachusett's program. I am sure you will be busier than ever.
Hi Bill!
I wish our state would do something like this to help get the tax credit before next year. The fact they are giving it to your buyers with no interest is awesome! :)
-Lisa
George - I was wondering about Erik's comment as well. I did not think it was possible and am glad you have confirmed the same.
Everyone - thanks for all your comments on Massachusetts 1st time buyer tax credits that can be used toward a down payment!
Bill, Wouldn't it have been nice if they put this program in place in the beginning? Either way, I'm glad to hear it's there now and I'm sure people will take advantage of it. It would be nice if the other states followed suit.
Bill :
Programs like this helps to keep us going and rolling. I hope the Federal Government extend it to the end of 2010.
Richard
'Looks like Massachusetts is at the forefront with this program.
George, Bill - I went down this path when the Ky legislation was first passed. We confirmed it was acceptable for a government entity to offer a second lien and the funds to be used towards the 3.5% requirement. I think there is a Mortgagee letter that offered some clarification, but I cannot find it.
Erik, when that option was first introduced that was the case, but within the same day of coming out with the Mortgagee Letter stating that you could do that, they pulled it because it violated FHA Guidelines. The new Mortgagee Letter clearly states that the $8,000 can be used in addition to the 3.5%, but not as a part of the 3.5%. The reason why you can't find the Mortgagee Letter is because they pulled it and it no longer exists.
If you can't pull together a down payment on your own, you shouldn't be buying. I am disheartened by the ever increasing government subsidization of the real estate industry. It is unfair to renters, it is unfair to our children for whom this will prop up still unaffordable prices, it is unfair to those who do not qualify for the credit, and it is unfair to taxpayers in general.
George - After reading Erik's comment I thought he may have missed the whole hoopla of the announcement and then subsequent retraction of this use of the money towards the 3.5%. I guess that is the case.
David - I agree with you 100% about a buyer should have to come up with their own funds. Part of the whole collapse in the Real Estate industry was due to loose lending practices. As it stands right now a buyer in this program MUST have 3.5% of their own money in order to qualify.
Great Report Bill, your State like the Feds and other States recognizes the positive economic energy that home owners provide to our communities and nation. That "first-time" purchasing experience can often times seem like a huge hurdle, especially during a period of economic recovery. The first home I purchased was at a time when interest rates were finally coming down, and adjustable rate mortgages first appeared I got an ARM at a teaser rate of 8.25%!!! John
Bill - This is great for you and your market. Ma. is doing a great thing for you. I know the fed program has helped out many of my own customers so far this year and kept me alive on a personal basis.
Great report. Go get em Bill
Hi Bill!! Haven't been around in a while but I wanted to tell you, Great Post! There sure are a lot things you can't use it for though!
Bill - This is a smarkt move on Massachusettes part. I hope you will see an increase in home sales as a result.
Hi Bill, This sounds like great news for first time homebuyers in Massachusetts. This should get people off the fence and into your office. :o)
Bill Not here in Virginia yet, but it sounds like a great boost in the federal program Karen
Missouri is offering additional funds to help homeowners purchase this year. To help rid the number of foreclosures we have, they offer $15,000 if they qualify to buy a foreclosure using MHDC financing. However, many bank owned properties can not be financed this way without repairs. Kind of a two sided sword.
Hi Bill, This a wonderful post and very informative. I would think this type of post is very useful for any of your Buyers and of course 1st time Buyers since it was directed there. An excellent format and so well done!
BIll,
Now all you need is a great mortgage person in MA to work with. I am finding that other top agents are concerned with working with one lender shops. Again the value that a Mortgage Broker may bring you over your one lender options.
Great post as always. Take care .
Awesome Bill .. very similar here in The Woodlands (Houston) Texas
Ed I work with one of the best mortgage lenders in the business.
Pippa - Thanks for the compliments about the 1st time buyer program.