-First-time homebuyers (defined as buyers who have not owned a home in the last three years) are eligible for a tax credit of up to $8,000. New to the package is an incentive for existing homeowners who’ve been at their current residence for at least five years. They will now be eligible for a credit of up to $6,500.

-The income limit has been increased. Previously, a single taxpayer could not have a modified adjusted gross income (MAGI) above $75,000 to claim the full credit, and up to $90,000 for a partial credit. Those limits have been raised considerably to $125,00 and $145,000, respectively. In addition, married couples can now qualify with a MAGI of between $225,000 and $245,000.

-Eligibility for the new program is for homes purchased after Nov. 6, 2009 and before May 1, 2010. However, home purchases subject to a binding sales contract by April 30, 2010 will still qualify provided that the closing occurs prior to July 1, 2010.

Proponents are hopeful that the extension will help the real estate market continue its recent surge in momentum. Moody’s estimates that the program will have helped trigger an additional 400,000 sales from its inception in February 2009 through the end of November. If you have any questions regarding the new tax credit, please feel free to contact me.

Before this becomes official Fha will have to issue a mortgagee letter to approved Fha lenders. The $8,000 will be issued as a temporary bridge loan, and will have to be approved by the end lenders.

I will keep you posted on any updates to this news.

Daily Real Estate News  |  May 12, 2009  |    Share

Tax Credit Can Be Used for Down Payment
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.Previously, most buyers wouldn’t receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit: Advancing the U.S. Economy,” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.Other Solutions for Today’s MarketDuring his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”