Tax Credits, Heroes Programs, Bond Money, Down Payment Assistance and Rate Buydowns??????

By
Real Estate Agent with Keller Williams Seven Hills 243495

Interest Rate Buydowns

There has been a lot of talk lately about different programs available to buyers in this real estate market.  What we don't want is to have buyers or sellers so overwhelmed with all the choices out there that they just give up.   Many buyers are eligible for multiple programs and need a good lender to navigate them through this.  Most of the information below has been taken from the Ohio Housing Finance Agency Website and I have linked that here.  Listed below are some of the programs currently available in the Greater Cincinnati, Ohio Real Estate Market:

US Government Tax Credit:

General Rules:

A "first time home buyer" is defined as someone who has not owned a primary home in the

last three years. If you are a "first-time home buyer", your tax credit will amount to 10% of the

purchase price of your new home not to exceed $8,000.

A "long-time resident" is defined as someone who has lived in the same primary home for 5

out of the past 8 years. If you are a "long-time resident", your tax credit will amount to 10% of

the purchase price of your new home not to exceed $6,500.

The tax credit does not need to be paid back if you continue living in the home as your

primary residence for three years without selling it

The home must be purchased for less than $800,000 before May 1, 2010. If you sign a binding contract to

purchase a home before May 1st, you would need to close on the transaction before July 1, 2010.

Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the

full tax credit

You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent

(child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews,

nieces, and others

If you are married, both spouses must qualify for the credit

If more than one unmarried individual is buying the property, the credit can be split up among all the individuals

who qualify. However, the total credit taken cannot exceed $8,000 (or $6,500 for "long-time residents").

Alternatively, if only one of the unmarried buyers qualifies for the credit based on their income or past home

ownership status, the individual who qualifies for the credit can claim the full credit.

The credit applies even if you have co-signers on your mortgage loan

The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence - you could

live in one unit and rent out the others

How does the tax credit work?

A tax credit is kind of like a gift certificate that you can use to pay your taxes - it reduces your income tax bill on a dollar

for dollar basis. Imagine paying your bill at IRS Restaurant, and then later getting an IRS Restaurant gift certificate.

Normally, you would need to go back to IRS Restaurant and buy more food in order to use your new gift certificate. But

what if IRS Restaurant allowed you to just turn in your gift certificate for cash? That's how the home buyer tax credit

works! All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check

for $8,000 (or $6,500) - just like the example of IRS Restaurant that allows you to exchange your gift certificate for

cash! Remember though, you'll receive the $8,000 (or $6,500) from the IRS AFTER you purchase your new home, so

you cannot use the funds to help with your down payment.

Heroes' Program

Ohio heroes make a difference in our lives by working hard in critical jobs every day. OHFA is proud to offer all the benefits of our First-Time Homebuyer Program to Ohio's heroes at a .25% lower interest rate.

Do I Qualify?

The Ohio Heroes Program is available to the following full-time employees who are:

  • Active Military, Active Reserve, or a Veteran - Qualified Active Duty Service personnel include Armed Services or Reserve Forces. Qualified veterans include military members honorably discharged from any branch of the U.S. Armed Forces.
  • Firefighters, Emergency Medical Technicians or Paramedics - Sworn paid members of a fire department whose regular duties include fire suppression or prevention, emergency medical response, hazardous materials response.
  • Health Care Workers - Certified, accredited, or licensed health care workers who are employed full-time as a medical resident or fellow, dental hygienist, nurse, nursing assistant, pharmacist, pharmacy technician, physician's assistant, medical technician, technologist, or therapist.
  • Police Officers - Individuals commissioned as a police officer by a federal, state, county, or municipal or township government, or a public or private college or university; must be sworn to uphold, and make arrests for violations of federal, state, county, municipal, or township law or respond to terrorism.
  • Teachers - Individuals employed full-time by an accredited or state recognized public school, private school, or federal, state, county, or municipal educational agency as a state-certified classroom teacher or administrator in grades K-12 or higher education.

Applicants for the Ohio Heroes Program must:

  • Meet OHFA's income and purchase price limits.
  • Be a first-time homebuyer-someone who has not owned or had an ownership interest in his/her principal residence in the last three years. Not a first-time homebuyer? Check out our Target Area Loan Program.
  • Be creditworthy. Minimum credit scores may apply.
  • Have a signed Purchase and Sales Agreement.
  • Qualify for the loan being requested. Lenders will assess your ability to afford a home by considering income, assets, job stability, liabilities, and other criteria.

First Time Homebuyer Program:

Thousands of low- and moderate-income Ohioans have purchased homes of their own thanks to OHFA's First-Time Homebuyer Program. The competitive interest rates and mortgage options on our 30-year, fixed-rate mortgage loans make it affordable for qualifying buyers to realize the dream of homeownership.

Do I Qualify?

Applicants for the First-Time Homebuyer Program must meet OHFA income limits, and properties must meet purchase price limits. The limits vary by city and town. Check income and purchase price limits.

To qualify for an OHFA loan, you must also:

  • Be a first-time homebuyer-someone who has not owned or had an ownership interest in his/her principal residence in the last three years-or be a qualified military veteran. Not a first-time homebuyer or a military veteran? Check out our Target Area Loan Program.
  • Be creditworthy. Minimum credit scores may apply.
  • Have a signed Purchase and Sales Agreement for a qualifying property.
  • Qualify for the loan being requested. Lenders will assess your ability to afford a home by considering income, assets, job stability, liabilities, and other criteria.

Additional property requirements:

  • Properties are limited to two acres unless additional acreage is required by local health or safety code.
  • Qualifying properties include:
  •  
    • Existing homes: single-family dwellings, duplexes, and up to four-unit properties
    • Spec/Nearly completed homes: one-unit single-family dwellings
    • Modular/Manufactured homes: one-unit single-family dwellings, permanently affixed to a foundation

OHFA's Target Area Loan Program helps revitalize federally-designated target areas by making our affordable first-time homebuyer loan products and competitive interest rates available to ANY qualifying buyer purchasing a home in these areas.

What is a Target Area?

A target area is an economically distressed area designated by the U.S. Department of Housing and Urban Development (HUD). Most Ohio counties contain both target and non-target areas. For more information, download a list of target areas from our download center. You can also visit our target area maps page and click on your county to view target areas.

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Do I Qualify?

Target Area Loan applicants do not have to be first-time buyers. However, the following program requirements apply.

To qualify for an OHFA Target Area Loan, you must:

  • Meet OHFA's income and purchase price limits. Please note that income and purchase price limits may be higher for Target Area Loans.
  • Be creditworthy. Minimum credit scores may apply.
  • Have a signed Purchase and Sales Agreement.
  • Qualify for the loan being requested. Lenders will assess your ability to afford a home by considering income, assets, job stability, liabilities, and other criteria.

Additional property requirements:

  • Loans are available for properties up to two acres (unless additional acreage is required by local health or safety code).
  • Qualifying properties include:
  •  
    • Existing homes: one-unit single-family dwelling and duplexes up to four units
    • Spec/Nearly completed homes: one-unit single-family dwellings
    • Modular/Manufactured homes: one-unit single-family dwellings

Down Payment Assistance Grants:

If paying for a down payment and closing costs have kept you from getting into a home of your own, OHFA's Down Payment Assistance Grant may be able to help. Eligible borrowers participating in the First-Time Homebuyer Program, Target Area Loan Program, and Ohio Heroes Program can use the grant to greatly reduce the out-of-pocket expenses associated with buying a home.

If you qualify for one of OHFA's home loan programs, you can choose to take advantage of the Down Payment Assistance Grant.

  • OHFA will issue a grant in an amount up to 2.5% of your home's purchase price.
  • You can use the grant to pay for the down payment, closing costs, or other prepaid expenses incurred prior to closing. Keep in mind that while the grant will greatly reduce your expenses, you may still be required to pay for some costs out of pocket.
  • If you take advantage of the grant, your mortgage interest rate will be .5% higher than OHFA's current mortgage rates.

Do I Qualify?

To qualify for the Down Payment Assistance Grant, you must meet all requirements for your OHFA homeownership loan program. Check requirements for the First-Time Homebuyer Program, Target Area Loan Program, and Ohio Heroes Program.

In addition, you must either:

  • Complete a free homebuyer education course offered by any HUD-approved housing counseling agency, or
  • Use the streamlined OHFA homebuyer education program.

Learn more about your homebuyer education options.

Downloadable Information

You can download information about our loan programs from our download center.

Questions?

Your lender can help you choose the down payment option that is right for you. You can also check out our homeownership FAQs for more information.

Grants for Grads:

Recent college graduates, including those earning postgraduate degrees, can now receive down payment and closing cost assistance and a favorable mortgage interest rate from an OHFA participating lender through the Grants for Grads Program. Eligible borrowers can use the grant to reduce the out-of-pocket expenses associated with buying a home.

If you are an income-eligible first-time homebuyer, graduated from an Ohio high school and have earned an associate, bachelor's, master's, doctorate or other postgraduate degree within the last 18 months, you can take advantage of the Grants for Grads Program.

  • OHFA will issue a grant in an amount for 2.5% of your home's purchase price.
  • You can use the grant to pay for the down payment, closing costs, or other prepaid expenses incurred prior to closing. Keep in mind that while the grant will help cover some of your up-front costs, you may still be required to contribute some money as well.
  • The grant will be issued as a second mortgage with a 0% interest rate with no payment due. The loan is forgivable after five years. However, if you move out of Ohio prior to the five-year mark, you are responsible for paying a portion of the grant back to OHFA as indicated below:

 


Months resided in home

Amount of grant owed to OHFA if you move out of state

Less than 12 months

100%

12 months to 24 months

80%

24 months to 36 months

60%

36 months to 48 months

40%

48 months to 60 months

20%

Do I Qualify?

To qualify for the Grants for Grads Program, you must:

  • Be a first-time homebuyer
  • Meet specific income guidelines
  • Have graduated from an Ohio high school
  • Apply for the grant within 18 months of graduating from an educational institute recognized by the Ohio Board of Regents
  • Obtain a mortgage through an OHFA participating lender

In addition, you must either:

  • Complete a free homebuyer education course offered by any housing counseling agency approved by the U.S. Department of Housing and Urban Development, or
  • Use the streamlined OHFA homebuyer education program.

Learn more about your homebuyer education options.

Downloadable Information

You can download a Grants for Grads Fact Sheet (1.33 MB Adobe PDF File) now or visit our download center for information about any of our loan programs.

Questions?

Your lender can help you choose the OHFA program that is right for you. You can also check out our Grants for Grads FAQs and homeownership FAQs for more information

Let OHFA help you with down payment and closing costs through the Homebuyer Advantage Program. Eligible borrowers participating in the First-Time Homebuyer Program or Ohio Heroes Program can use this second mortgage loan to greatly reduce the out-of-pocket expenses associated with buying a home.

If you qualify for one of OHFA's home loan programs, you can choose to take advantage of the Homebuyer Advantage Program.

  • OHFA will issue a loan as a second mortgage of up to 3% of the purchase price of the home.
  • You can use the loan for the down payment, closing costs, or other prepaid expenses incurred prior to closing on the home. The second mortgage loan will greatly reduce your expenses; however, you may still be required to pay for certain costs that may not be covered by the loan.
  • If you are approved for the second mortgage loan, the interest rate will be fixed at 1% higher than OHFA's current mortgage rate at the time your loan is reserved by your lender. The loan term is 15 years.
  • Your lender will include the payment on your second mortgage loan when calculating how much you are eligible to borrow.

Do I Qualify?

To qualify for the Homebuyer Advantage Program, you must meet all requirements of the OHFA homeownership loan program and have a credit score of 620 or higher. (You may be eligible even if you have no credit score. Check with an OHFA participating lender.) Check requirements for the First-Time Homebuyer Program and Ohio Heroes Program.

In addition, you must either:

  • Complete a free homebuyer education course offered by any HUD-approved housing counseling agency, or
  • Use the streamlined OHFA homebuyer education program.

Learn more about your homebuyer education options.

Downloadable Information

You can download information about our loan programs from our download center.

Questions?

Your lender can help you choose the down payment option that is right for you. You can also check out our homeownership FAQs for more information.

Mortgage Credit Certificates (MCCs) can help some families realize the dream of homeownership. An MCC creates an income tax deduction that reduces a household's federal income tax liability and allows the household to have more available income to make mortgage payments.

Follow this link if you are already an MCC holder.

How Does the Mortgage Credit Work?

Homebuyers who qualify for the program receive a Mortgage Credit Certificate from OHFA, which can be used to reduce their household's tax burden every year for the life of their mortgage loan. With an MCC, a percentage of what you pay in mortgage interest (20, 25, or 30%) becomes a tax credit that you can deduct dollar-for-dollar from your income tax liability. The remaining 80, 75, or 70% of your mortgage interest continues to qualify as an itemized tax deduction, as long as you have sufficient tax liability. The MCC Program cannot be used in conjunction with OHFA's First-Time Homebuyer Program.

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How Big Will My Tax Credit Be?

The percentage of the annual tax credit is based on the location and/or status of your property:

  • 20% credit for non-target area homes
  • 25% credit for target area homes (download a list of Ohio's target areas from our download center or visit our target area maps page)
  • 30% for Real Estate Owned (REO) properties (30% of the purchase of a single family property from HUD, Fannie Mae, Freddie Mac, VA, USDA-RD, or a financial institution that acquired the property through foreclosure)

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How is Mortgage Credit Calculated?

Imagine you pay $5,360* in interest on your home during the first year. If that home is in a non-target area, you can claim 20% of the interest, or $1,072, as a direct tax credit; meaning you will free up $1,072 to help make your loan payments. If the home was in a target area, you could claim 25% of the interest as a tax credit, and you could claim 30% of the interest as a tax credit for an REO home.

Keep in mind that each year the amount of interest you pay on your loan will decrease, which means your mortgage credit will also be reduced each year.

In addition:

  • Your tax credit cannot be larger than your annual federal income tax liability after deductions, exemptions, and other credits; meaning that you cannot receive a $1,072 tax credit if you do not owe at least $1,072 in taxes.
  •  
    • Your personal deductions may change from year to year, which will affect the amount of your tax credit.
    • If you have a large number of personal deductions-for example, if you are a single income family with multiple children-this program may not be right for you.
  • The maximum tax credit you can receive is $2,000 per year.

*$5,360 is about what you would owe in interest during the first 12 months on a $90,000 fixed-rate mortgage at 6% interest.

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Do I Qualify?

Applicants for the Mortgage Credit Certificate Program must meet OHFA income limits, and properties must meet purchase price limits. The limits vary by county. Check income and purchase price limits.

To qualify for an MCC, you must also:

  • Meet one of the following:
  •  
    • Be a first-time homebuyer-someone who has not owned or had an ownership interest in his/her principal residence in the last three years,
    • Purchase a home in a target area-an economically distressed area designated by the U.S. Department of Housing and Urban Development (HUD), (download Ohio's target areas from our download center or visit our target area maps page), or
    • Be a military veteran who has received an honorable discharge.
  • Occupy the property you are buying as your primary residence for every year you claim the MCC. If the property ever ceases to be your primary residence, OHFA may revoke your MCC approval.
  • Be creditworthy. You must meet standard credit and underwriting criteria established by the IRS and HUD for the MCC Program. See IRS Publication 530.

Additional Property Requirements

Qualifying properties include:

  • New or existing single-family units, condominiums, and planned unit development homes within the State of Ohio.
  • Modular or manufactured homes must be permanently affixed to the foundation and titled as real estate to be eligible.

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Loan Types

Different lenders offer different types of mortgage loans with various features and fees. Lenders' requirements for these loans also vary. The lender you choose can help you understand your options.

Keep in mind that to be eligible for an MCC, your loan must:

  • Be a new mortgage loan-you cannot obtain an MCC if you are refinancing an existing mortgage loan.
  • Be a fixed-rate loan-you may choose the fixed-rate loan that best meets your needs. Conventional, FHA, VA, or USDA-RD mortgages all qualify for the program.

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How to Apply

If you meet the eligibility criteria defined above, you can apply for an MCC when you apply for a mortgage loan at any of our participating lenders. Find a participating lender.

In order for the lender to process your application for a housing loan and MCC, you will need:

  • A signed purchase contract
  • Signed and dated copies of your federal income tax returns. All applicants for the loan must provide copies for the past three years.
  • Recent pay stubs
  • The names, addresses, contact persons, and telephone numbers of your employer(s)
  • Savings and checking account information including names and addresses of institutions and account numbers
  • Creditor information including names and addresses of creditors, account numbers, and balances
  • Landlord information including names, addresses, and dates of rental

The lender may also require you to pay an application fee at the time of the application.

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How Can I Find Foreclosed REO (Real Estate Owned) Properties in Ohio?

Borrowers interested in locating foreclosed REO properties in Ohio can select from the links below:

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About Recapture Tax

OHFA will reimburse borrowers for the full amount of any recapture tax in the rare instances where tax repayment is required. Learn more...

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Downloadable Information

You can download information about our loan programs from our download center.

About the OHFA

The Ohio Housing Finance Agency (OHFA) makes affordable housing opportunities available to low- to moderate-income Ohioans, including first-time homebuyers, renters, senior citizens, and other populations with special needs. Formerly a division of the Ohio Department of Development, OHFA became an independent state agency on July 1, 2005 through Amended Substitute House Bill (HB) 431. Our independent status allows us to institute cost-saving measures and achieve efficiencies to better serve Ohio's long-term affordable housing needs.

What We Do

OHFA helps low- to moderate-income Ohioans purchase new homes or find quality, affordable rental housing. Through a variety of different programs, OHFA:

  • Provides low-cost mortgages to homeowners and homebuyers
    Through partnerships with real estate professionals and mortgage lenders throughout the state, OHFA's Office
    of Homeownership offers low-interest loans to first-time homebuyers and buyers purchasing homes in HUD's target reinvestment areas. Learn more about our homeownership programs.
  • Offers financial incentives for developers to increase the supply of affordable rental housing
    OHFA's Office of Planning, Preservation, and Development administers different funding programs, including the federal Housing Credit Program, which for-profit and nonprofit developers can use to reduce costs associated
    with developing or rehabilitating affordable rental housing. Learn more about our housing development programs.
  • Helps property managers maintain safe, decent, affordable housing environments
    OHFA's Office of Program Compliance monitors more than 1,000 tax credit properties throughout the state to ensure compliance with program regulations. Learn more about program compliance.

How We Do It

OHFA funds low-cost mortgage loans and finances the development and rehabilitation of affordable rental housing primarily by issuing tax-exempt mortgage revenue bonds. Since its inception, OHFA has issued more than $10 billion in single-family mortgage revenue bonds and $614 million in multifamily mortgage revenue bonds, resulting in $6.5 billion in mortgage loans to more than 100,000 Ohioans and the creation of more than 87,400 affordable rental housing units.

Our Customers Trust Us

OHFA has been providing Ohioans with homeownership assistance for over 25 years. See what our customers have to say about us in our new, inspiring video.

If you have any direct needs or questions, please don't hesitate to call me directly at 513-732-2720.  I can also refer you to a lender to get a great interest rate on your next home purchase.  For information on the tax credit click here.

Have a great day!
Derek Tye

Derek Tye has been an influential Realtor in the Greater Cincinnati Ohio Market for 5 years.  For more information about our Greater Cincinnati Ohio Real Estate services we offer please call us at 513-732-2720 or visit our website at www.CincyOhioHomes.com .  Don't miss our Testimonials!


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Posted by
Derek Tye
2010 Realtor of the Year: Southern Ohio Association of Realtors
The Tye Group with Keller Williams Seven Hills
Ph: 513-549-7469 Fax: 513-842-7818
www.CincyOhioHomes.com
derek@derektye.com
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