How the New First-Time Buyer Tax Credit WorksUnder the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit equal to 10 percent of the property up to a maximum of $7,500. Here’s how it works:
- The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.
- This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.
- The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.
- High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.
Source: The Washington Post, Michelle Singletary (07/03/08)
H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:
- GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
View 2009 FHA and GSE loan limit estimates (PDF)
- FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The down payment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
View 2009 FHA and GSE loan limit estimates (PDF)
FHA Reform Chart (PDF)
- Homebuyer Tax Credit – a $7500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
First-time homebuyer tax credit chart
Frequently asked questions about the first-time homebuyer tax credit
- FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
FHA Foreclosure Rescue Chart
- Seller-funded down payment assistance programs – codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
More about the seller-funded down payment assistance provision
Tips to finding down payment assistance programs (PDF)
- VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
- Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
- GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
- Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
- National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
- CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
More about the CDBG funding provision
- LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
- Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.
- GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
View 2009 FHA and GSE loan limit estimates (PDF)
- FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The down payment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
View 2009 FHA and GSE loan limit estimates (PDF)
FHA Reform Chart (PDF)
- Homebuyer Tax Credit – a $7500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
First-time homebuyer tax credit chart
Frequently asked questions about the first-time homebuyer tax credit
- FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
FHA Foreclosure Rescue Chart
- Seller-funded down payment assistance programs – codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
More about the seller-funded down payment assistance provision
Tips to finding down payment assistance programs (PDF)
- VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
- Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
- GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
- Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
- National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
- CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
More about the CDBG funding provision
- LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
- Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.
- GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
View 2009 FHA and GSE loan limit estimates (PDF)
- FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The down payment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
View 2009 FHA and GSE loan limit estimates (PDF)
FHA Reform Chart (PDF)
- Homebuyer Tax Credit – a $7500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
First-time homebuyer tax credit chart
Frequently asked questions about the first-time homebuyer tax credit
- FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
FHA Foreclosure Rescue Chart
- Seller-funded down payment assistance programs – codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
More about the seller-funded down payment assistance provision
Tips to finding down payment assistance programs (PDF)
- VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
- Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
- GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
- Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
- National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
- CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
More about the CDBG funding provision
- LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
- Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.
Key Provision of the Housing Stimulus Bill (H.R. 3221): Facts About Seller-funded Down payment Assistance Provision
(last updated 7/31/08)
Contrary to an email you may have received, the Housing bill signed by the President on July 30, 2008, does not eliminate all down payment assistance programs from eligibility for FHA insurance. Only those programs that are funded directly from the seller or other party to the transaction are prohibited. Down payment assistance from family members, government programs, or charities that are not seller-funded is still permitted.
The prohibition goes into effect October 1, 2008.
View a complete summary and history of the issue
Main points about the Seller-funded Down payment Assistance Provision
- Seller-funded down payment assisted FHA loans have a very high default rate. In FY2007, the default rate on seller-funded down payment loans was more than 28%, roughly three times the default rate on FHA loans without seller-funded down payment assistance.
- The FHA does not collect enough in premiums to sustain a 28% default rate on its loan portfolio without the need to raise premiums for all FHA borrowers or receive a federal subsidy for the first time in the 71-year history of the FHA program.
- FHA is the only mortgage program that has allowed seller-funded down payment assistance.
- Under the legislation, FHA borrowers can still receive a 100% loan. The only requirement is that they must contribute 3.5% of the total costs in either the down payment and/or closing costs.
What NAR Is Doing Now
NAR understands the concerns our members have about the elimination of these programs and is talking to Nehemiah and the other provider-groups to see what changes can be made in their programs that would allow down payment assistance to be provided. In addition, NAR will be working with Chairman Barney Frank (D-MA) and Subcommittee Chairwoman Maxine Waters (D-CA) who have indicated their desire to find a way to save these programs.
Finding Alternative Down payment Assistance Programs:
There are down payment assistance programs that will still be permissible.
The American Dream Down payment
State and local agency programs
Tips to locate down payment assistance providers (provided by NAR’s Housing Opportunity program, available as a PDF)
Summary
The American Dream Down payment Initiative (ADDI) was signed into law on December 16, 2003. The American Dream Down payment Assistance Act authorizes up to $200 million annually for fiscal years 2004 – 2007. ADDI will provide funds to all fifty states and to local participating jurisdictions that have a population of at least 150,000 or will receive an allocation of at least $50,000 under the ADDI formula. ADDI will be administered as a part of the HOME Investment Partnerships Program, a formula grant program.
Purpose
ADDI aims to increase the homeownership rate, especially among lower income and minority households, and to revitalize and stabilize communities. ADDI will help first-time homebuyers with the biggest hurdle to homeownership: down payment and closing costs. The program was created to assist low-income first-time homebuyers in purchasing single-family homes by providing funds for down payment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase.
Type of Assistance
ADDI will provide down payment, closing costs, and rehabilitation assistance to eligible individuals. The amount of ADDI assistance provided may not exceed $10,000 or six percent of the purchase price of the home, whichever is greater. The rehabilitation must be completed within one year of the home purchase. Rehabilitation may include, but is not limited to, the reduction of lead paint hazards and the remediation of other home health hazards.
Eligible Customers
To be eligible for ADDI assistance, individuals must be first-time homebuyers interested in purchasing single family housing. A first-time homebuyer is defined as an individual and his or her spouse who have not owned a home during the three-year period prior to the purchase of a home with ADDI assistance. ADDI funds may be used to purchase one- to four- family housing, condominium unit, cooperative unit, or manufactured housing. Additionally, individuals who qualify for ADDI assistance must have incomes not exceeding 80% of area median income.
Eligible Activities
ADDI funds may be used for down payment, closing costs and, if necessary, rehabilitation in conjunction with home purchase. ADDI funds used for rehabilitation may not exceed twenty percent of the participating jurisdiction’s total ADDI allocation. The rehabilitation assisted with ADDI funds must be completed within one year of the home purchase.
Funding Status
In FY 2007, Congress appropriated $24,750,000 for ADDI. Previously, Congress appropriated $74,513,000 in FY2003 and $86,984 in FY2004, $49,600,000 in FY2005 and $24,750,000 in FY2006. HUD has issued formula allocations for FY 2007 to assist participating jurisdictions in preparing their consolidated plans.
Obtaining Assistance
First, check the formula allocation page to determine whether your local HOME administering agency received ADDI funding. If they did not receive ADDI funding, ADDI funds may be available through your state. Every state received ADDI funds. The contacts for state are available in the HOME administering agency list.
HOME Program Contacts
The HOME program is implemented through State and local governments called participating jurisdictions or “PJs”. Participating jurisdictions may be States or units of general local government, including consortia and urban counties. HOME participating jurisdictions have a great deal of flexibility in designing and managing their HOME programs. HOME grants are awarded each year to participating jurisdictions based on an allocation formula. States are automatically eligible for HOME funds. However, local jurisdictions must meet a minimum allocation threshold in order to be a participating jurisdiction. There are over 500 participating jurisdictions. Localities which do not receive a direct HOME allocation from HUD, may receive HOME funds through the State’s HOME program. Local HUD Offices work with States and units of general local government. To find the local HUD staff who work with HOME program, contact the appropriate CPD Field Office. Field office contact information can be found by visiting the CPD Field Office Directors page and clicking on the region in which you are interested.
To find a specific local HOME program contact, click below on the State in which you are interested. HUD has also produced a Participation Directory for the FY2007 HOME program. This directory lists units of general local government that are either metropolitan cities, urban counties or approved HOME consortia for FY2007.
Metropolitan Cities – Principal cities, other cities in a Metropolitan Area with 50,000 or more population and cities that retain their metropolitan city status as a result of previously meeting the criteria as metropolitan cities.
Urban Counties – Counties which are in Metropolitan Areas and which have a population of 200,000 or more, after exclusion of metropolitan cities and counties that continue to qualify as urban counties as a result of previously meeting the criteria as urban counties.
HOME consortia – Geographically contiguous units of general local government that have been approved by HUD to be a single unit of general local government for purposes of the HOME Program. more on HOME Consortia…
Home Contacts for Nevada
Ms. Debra J. Parra, HOME Program Manager
State of Nevada
Department of Business and Industry
1802 N. Carson St.
Suite 154
Carson City, NV 89701-1215
Phone: (775) 687-4258
Fax: (775) 687-4040
Email
Website
Home Contacts for Nevada Cities
City of Henderson
Mr. Doug Kuntz, Affordable Housing Coordinator
Department of Neighborhood Services
P.O. Box 95050
Henderson, NV 89009-5050
Phone: (702) 267-2018
Fax: (702) 267-2001
Email
Website
City of Reno
Ms. Jodi Royal-Goodwin, Community Reinvestment Manager
Division of Community Resources
P.O. Box 1900
Reno, NV 89505-1900
Phone: (775) 334-2065
Fax: (775) 334-2343
Website
County of Clark
Mr. Michael J. Pawlak, Senior Management Analyst
Division of Community Resources Management
P.O. Box 551212
Las Vegas, NV 89155-1212
Phone: (702) 455-5025
Fax: (702) 455-5038
Email
Website
County of Lyon Consortium
Ms. Diane L. Pettitt, Housing Specialist
Western Nevada Development District
3208 Goni Rd.
Suite 183
Carson City, NV 89706
Phone: (775) 883-7333
Fax: (775) 883-0722
Email
Website
Posted by Joe Laliberte 
Las Vegas & Summerlin Real Estate 
