Just Approved: Extensions for Loan Limits & Home Buyer Tax Credit

In recent weeks, Congress has passed important legislation aimed at supporting the stability and growth of our housing market and overall economy.

1) Loan Limit Extensions - Congress has approved the extension of higher loan limits for mortgages backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). These limits were temporarily raised in 2008 to $729,750 as part of the national stimulus plan, and were scheduled to expire at the end of the year. This new measure extends the higher loan limits through December 31, 2010.

2) Home Buyer Tax Credit – President Obama just signed an extension of the first-time home buyer credit program. The revised program now benefits both first-time homebuyers and existing homeowners who purchase and move.
First-time homebuyers may be eligible for up to an $8000 tax credit.
Existing homeowners may be eligible for up to a $6500 tax credit. Some of the fine print includes:
Eligibility: All U.S. citizens who file taxes are eligible to participate. A “first time” home buyer means you have not owned your principal residence for at least 3 years. An “existing” home owner means that you have owned and lived in your principal residence for at least 5 consecutive years out of the last 8 years.
Income limits: Eligibility for the tax credit is based on the household’s “modified adjusted gross income” (MAGI).

Modified Adjusted Gross Income (MAGI)

Full Tax Credit for Single Person, making less than $125,000
Partial Tax Credit for Single Person, making $125,000-$145,000

Full Tax Credit for Married Filing Jointly, making less than $225,000
Partial Tax Credit for Married Filing Jointly, making $225,000-$245,000

No Tax Credit- Single, over $145,000
Not Tax Credti- Married, over $245,000

Eligibility dates: Homes purchased after 11/6/2009 and before May 1, 2010. Note that homes that are in a binding contract by 4/30/2010 may qualify, provided the purchase closes by July 1, 2010.
Types of homes – New and resale homes (single family, townhomes, and condos) used as a principal residence with a purchase price of less than $800,000.
Residence requirements – the property needs to be the buyer’s principal residence for at least 3 years after close of escrow.

For more information on these programs – please give me a call. Details on the new tax credit program is also posted on the website www.federalhousingtaxcredit.com.