Articles in Category: Taxes and Credits

July 29, 2024

FHA Loans And Multi-Unit Properties

FHA home loans are intended for owner-occupiers. The FHA loan occupancy requirement states that the borrower must begin using the home purchased with an FHA loan within a specified time after closing (usually within 60 days.) But FHA loan rules also permit owner-occupiers to buy multi-unit properties. For multi-unit homes, the borrower must occupy at least one unit but is free to rent out the unused spaces in the house to others. FHA loan rules limit the number of units to four in these transactions. If a borrower intends to apply for an FHA loan for a home with multiple units, it may be tempting to try to convince the lender to factor in any potential income from such rental as part of the applicant’s debt-to-income ratio. Is this permitted? | more...

March 19, 2024

First-Time Home Buyers May Benefit From Proposed Tax Credit

By Joe Wallace

A new mortgage tax credit proposal from the Biden administration could make buying a home more affordable for first-time home buyers. The President’s proposal includes a credit potentially worth up to $10k per homeowner for qualifying transactions. If the plan is approved, those buying starter homes and/or first-time home buyers could get into a more affordable mortgage. Why Now? According to RedFin, 2023 was the least affordable year to try to purchase a house. In 2023, those making approximately $78,000 “would have spent 41.4% of earnings by purchasing a median-price home at $408,806, up from 38.7% in 2022” according to a report by RedFin. And many American homeowners today pay on loans with mortgage interest rates lower than those currently available for purchase or refinance. That would tend to make | more...

July 20, 2015

FHA Loans, Seller Concessions, and Cash To The Borrower

By Joe Wallace

We recently got a question about an FHA loan situation where the seller of the home agreed to pay 3.5% of the closing costs on a transaction. According to the reader question, the “actual permitted seller concessions” were much lower. The reader asked, “Since FHA would not allow cash back”, the buyer asked the seller for the difference of the two amounts to be paid to the borrower, “outside of closing” The question the reader asks: Is this legal? FHA loans do not permit cash back to the borrower except in the form of refunds. However, HUD 4155.2 does include some guidelines for seller concessions, which are limited to six percent of the sales price. Those guidelines do permit “monetary gifts” as we’ll read in a moment. Chapter Four of | more...

May 26, 2015

The 2009 First Time Homebuyer Tax Credit: A Reader Question

By Joe Wallace

A reader asks, “Is the tax credit still available to 1st time new home buyers? If not, are there any other credits available that can help new home buyers? Will I be considered a new home buyer if I purchased a home just over 5 (2010) years and attempt to purchase a new one in 2015?” We can’t give out tax advice, as we aren’t tax professionals, so it would be necessary to contact the IRS directly to learn about any homebuyer-related tax credits that might be available for a given tax year. Tax law changes quite frequently and what was legal last year may not be allowed this year due to legislation, expiration of government programs, or other changes. That said, we can report that it appears that, based | more...

March 11, 2011

FHA Advice: Don’t Pay For Foreclosure Avoidance Counseling

By Joe Wallace

There are many ads on television by private companies offering debt counseling services. But when it comes specifically to foreclosure avoidance, did you know you do not have to pay for counseling services? According to the FHA official site, “Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks

February 17, 2011

The FHA Borrower’s Rights Under RESPA Part 2

By Joe Wallace

In our last post we discussed FHA loans and the list of RESPA Borrower's Rights--a collection of rights FHA loan applicants need to know before applying for an FHA mortgage loan. The ten areas covered under RESPA Borrower's Rights include informed borrower requirements such as full disclosure of all non-refundable loan fees and other charges, disclosure as to the final cost of the loan and other important details.

February 17, 2011

FHA Borrower’s Rights Under RESPA

By Joe Wallace

The FHA official site has a section called RESPA Borrower's Rights which informs borrowers of a list of things they should be aware of when shopping for an FHA mortgage loan. There are ten areas addressed by the Borrower's Rights section--some are common knowledge, while others imply obligations the lender has to the borrower to fulfill parts of RESPA law that pertain to full disclosure requirements.

June 16, 2009

Using the 2009 First-Time Homebuyer Tax Credit

By Bruce Reichstein

First time home buyers purchasing a home with an FHA loan or going through a HUD-approved charitable agency can use their 2009 First Time Homebuyer's Tax Credit to make their downpayment. The Department of Housing and Urban Development recently announced this new first-time homebuyer perk, which helps millions of FHA borrowers reduce the financial stress of making that first home purchase.

June 12, 2009

2009 Tax Credit and FHA Loan Down Payments Update

By Bruce Reichstein

FHA borrowers were told they could use the loan as a down payment on their homes, but legal issues prevent banks from issuing down payment assistance on FHA mortgages. Since the initial May announcement, the rules have been revised so that such bridge loans are used within federal guidelines.

June 10, 2009

FHA Home Loan Numbers Increase in Spite of Housing Slump

By Bruce Reichstein

While indicators show conventional lending markets are still feeling the effects of the housing slump the FHA has taken a larger role in helping consumers get affordable home loans. Some of the most recent developments are making those on the fence about buying a new home in this economy give FHA loans a second look.