Washington State Housing Financing Commission has one of the most widely beneficial and little known programs for first time home-buyers. The main benefit of this program is an annual Federal Income Tax credit equal to 20% of the mortgage interest costs. This can reduce the effective mortgage interest rate substantially as noted in the chart below. Additional features are as follows:
1 - You don't need to be doing the poverty line dance to qualify - just a first time home-buyer with reasonably generous income limits($90 to $100K in King and Snohomish counties, depending on household size)
2 - Reduced effective interest costs are also taken into account for purposes of loan qualifying.
3 - Generally available to be used with a wide variety of loan programs from a standard 20% down conventional loan to a 3.5% down FHA program.
Some caveats are also in order. Because the main benefit of this program is dependent on the existence of taxable income, it it not appropriate for everyone. And for those who do qualify, there is a potential recapture of the benefit should their income increase by more than 5% above the max program limits each year for up to a 9 year recapture period. But, for many first time home-buyers, it could be just the thing that opens the door to their home ownership dreams.
The opinions expressed in this article / post are entirely my own and do not necessarily represent the views of Guild Mortgage Company.
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