January 16, 2019
Many first-time home buyers want to know if there are government programs for those who have never purchased a home before. FHA home loans often get included into this category and it’s true; FHA mortgages are good for those buying a first home.
FHA loan limits have increased for two years in a row at the time of this writing, there are lower FHA FICO score requirements and lower down payment requirements for FHA loans that make them a good option to explore when shopping for your first home and your first real estate loan.
But FHA mortgages are not specifically intended for first-time buyers. You do not have to be a new house hunter to apply. That said, FHA mortgages for a starter home, first home, or for a new family can be more affordable, especially when you take advantage of government first-time home buyer programs.
What kind of programs do we mean? There are many, but one very important option to explore with your FHA mortgage loan is something called a Mortgage Credit Certificate or MCC, which can lower the amount of federal income tax a first-time home buyer is required to pay. This tax credit may be as much as half the amount of the interest you pay on your new mortgage loan in a year, with an annual cap amount of $2,000 at the time of this writing.
This is great at tax time, but how does a new home owner or first-time house buyer get immediate savings from this benefit? According to FDIC.gov, the borrower must submit “a revised W-4 withholding form with their employer, which should reduce the yearly tax contribution and increase the borrower’s take-home pay” but the buyer(s) may also opt to wait until filing a federal tax return instead.
Individual states have Housing Authority offices which frequently offer first-time home buyer programs including down payment assistance which may come in the form of a gift, or a loan for down payment funds.
The Michigan State Housing Development Authority is an example of one state that offers need-based first-time home buyer and/or first-time home owner assistance in the form of something called an Individual Development Account; these are “matched savings accounts” created by the state to help low-income families save up for expenses related to owning a home.
In this particular case the family must make a monthly deposit ($20 or more) to save a minimum of $1,000. The savings are matched three-to-one for homeownership and can be used for approved upgrades and improvements to the new home.
Check with a Housing Authority office in your county to see what first time home buyer options are waiting to help you in your housing market. You will be glad you did.
Fill out an online form and get started on the journey toward your very first home today! Once you have completed the form you will be contacted by a participating FHA lender who can discuss your needs. The website you use to complete the form is a private company and not a government agency.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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