First-time Homebuyer Tax Credit - is it right for your borrower?

The Housing and Economic Recovery Act of 2008 offers a tax credit up to $7,500 in the form of an interest-free loan from the IRS for first-time homebuyers who purchase a home between April 9th, 2008 and July 1, 2009.

However, the tax credit program cannot be used with Mortgage revenue Bond Programs, such as Minnesota Housing's Minnesota Mortgage Program (MMP) and the Community Activity Set Aside Program (CASA). Federal law prohibits the use of both.

The Advantages of Minnesota Housing First-Time Homebuyer Loans:

• Affordable fixed-rate loans to residents of Minnesota, helps your borrower save money, reduce their monthly payment and increases affordability.
• Interest free, deferred loans for downpayment and closing cost assistance for eligible borrowers. This is the cash you andy our client need to close the loan.
  • Entry Cost Assistance - provides up to $3,000 to help borrowers with down payment or closing costs (available to Targeted Borrowers and with CASA).
  • Monthly Payment Assistance - provides up to $75 per month to help pay a portion of the monthly payment in the early years of the mortgage. (available with CASA).
  • HOME Homeownership Entry Loan Program (HOME HELP) - provides downpayment and closing cost assistance in amounts of $5,000, $10,000 or $14,999 depending on borrower eligibility. The loan is partially forgiven after the first five years (available with CASA).
• Special mortgage insurance partner rates and job loss protection with applicable loans.

While the tax credit may benefit some homebuyers, consider the following:

• The tax credit is an interest-free loan from the IRS and cannot be used with Mortgage Revenue Bond programs like Minnesota Housing.
• Borrowers must correctly file their tax return to collect the credit.
• Since the tax credit is received after the borrower files their tax return, the funds will not be available to use at the closing table as downpayment.

Find out what's best for your borrower.
Please call the number below to speak to a Minnesota Housing representative to find out more about the benefits of our first-time homebuyer programs.

800.710.8871
www.mnhousing.gov
Because home means everything.

For more information on the First-time Buyer Tax Credit, it is recommended that borrowers contact the IRS or a tax advisor.