Mortgage Topics

In our February 17th blog post, we highlighted the four primary sections of the American Recovery and Reinvestment Act of 2009. The following are important updates to two of those sections.

$729,750 FHA and Higher Conforming Loan Limits Restored in High Cost Areas

Several lenders have started lending on the increased loan limits in the month of May while others are looking to do so in the near term. These limits are up from the previous higher conforming loan limits of $625,500 in areas designated as high cost by the Department of Housing and Urban Development (HUD).

Federal First-time Home Buyer Tax Credit of $8,000

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment. 

On May 12, 2009, HUD announced that the Federal Housing Administration (FHA) has given the green light to lenders for a change in the real estate down payment rules. The $8,000 tax credit may now actually be applied toward the down payment of the home purchase.

Please refer to our February 17th blog post for further details on this credit.

In addition to the above Federal assitance, the State of California has also sanctioned a tax credit.

State Income Tax Credit of $10,000

The state tax credit is for new homes purchased between March 1, 2009, and Feb. 28, 2010, or as long as program funding is available. Passage of the California state budget in February first established the credit and the cap current stands at $100 million, which is enough to provide 10,000 new home buyers with a $10,000 credit.

State legislation (Assembly Bill 765) was introduced May 13th, 2009 that would make it possible for an additional 20,000 taxpayers to take advantage of a popular program by increasing the existing $100 million cap for the California new home tax credit program to $300 million.

As of May 14, 2009, 5,668 applications have been submitted for the program, resulting in $54.9 million in credits being claimed.