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The nation’s official groundhog Punxsutawney Phil predicts six more weeks of winter. In some areas in Illinois the spring housing market has already started with the early birds looking to take advantage of the homebuyer tax credit that expires on April 30, 2010.
That means long-time homeowners who want to take advantage of the $6,500 tax credit (defined by the IRS as taxpayers who have occupied the same property as a principal residence for five consecutive years during the previous eight years) need to sign a contract to purchase a new home in the next three months. Note: The IRS does not require qualifying buyers using the long-time homeowner credit to sell their current home before purchasing their next principal residence. For more details, read FAQs from the IRS at www.irs.gov or consult your tax professional.
First-time buyers also have just a three-month window to purchase a home within the guidelines of the $8,000 tax credit.
The down payment often can be the biggest hurdle for first-time buyers. That’s why the Illinois Housing Development Authority (IHDA) created the Home Start Program with its package of low-interest rate mortgage and down payment assistance loans for first-time homebuyers and veterans. It also includes an option to use the tax credit toward the down payment by using IHDA’s Tax Credit Advance Loan.
1. Home Start First Mortgage
- 30-year fixed-rate loan
- FHA insured
- Affordable interest rates
- 3.5% down payment required
2. Down Payment Assistance Loan
- Provides 3% of the purchase price (up to $6,000)
- 0%, 10-year forgivable loan
- Only available with Home Start First Mortgage
3. Tax Credit Advance Loan – Expires April 30!
- Use the federal first-time homebuyer tax credit toward the down payment
- Provides 3% of the purchase price (up to $6,000)
- Only available with Home Start First Mortgage
Qualifications: Applicants must be a first-time homebuyer or a veteran, and have a minimum credit score of 620. Certain income and purchase price limits and debt ratios apply. The buyer must contribute 1 percent or $1,000 of the purchase price, whichever is greater, and complete required homeownership counseling. Borrowers should contact an IHDA-approved lender for program details.
REALTORS®, look to IAR’s tax credit page for a series of consumer flyers to promote the tax credit including:
- “Buy a Home, Get a Tax Credit” (info on both first-time buyer and long-time buyer credits)
- “Looking to Sell? Hurry to Get the $6,500 Tax Credit” (information on the long-time buyer credit)
- “The Home Start Program”
