Can you really get paid to buy a home?
The answer is a resounding YES! And it’s legal.
Before we talk about the “how” to do it, let’s look at the First Time / Move-Up Home Buyer Tax Credit. This credit, in a nutshell, is an actual credit of up to $8,000 from the Federal government for the purchase of a home that you will occupy. The actual amount you receive may be a little different, as the credit is actually for 10% of the purchase price of the home, up to $8,000 for first time home buyers and $6,500 for move-up buyers. There are income caps for both individuals and couples.
To qualify as a “First Time Home Buyer”, the purchaser must not have owned a home in the past three years.
To qualify as a move-up / repeat home buyer, you must have owned your home for five consecutive years during the past eight years.
To help understand how you may get paid to buy the home, let’s look at a couple financing options.
FHA - A program that was seldom used several years ago is in the headlines again. With it’s liberal qualifying requirements and 3.5% down payment, a buyer of an $80,000 home could get a loan with as little as $2,800 out of pocket assuming that the seller will pay closing costs and prepaid items. Even if the buyer is responsible for all the costs, they should be less than $6,500.
USDA Rural Development - This is a loan program that offers many great benefits, but is not used to it’s potential, as not all loan officers and real estate agents are familiar with the program and it is not available in all areas. The program was designed for low to moderate income borrowers in rural areas. The benefit of this program is the 100% financing with the small 2% funding fee that can be included into the loan. And, if the appraisal is high enough, closing costs can be included also (or paid for by the seller). This means that the borrower could potentially purchase a home with NO money out of pocket.
As you can see, it is quite possible to purchase a home and get money back from the federal government that exceeds the amount of the down payment and closing costs. And, it’s all perfectly legal. Just hurry, as the deadline to have a signed purchase agreement is April 30, 2010 and you must close on your new home on or before June 30, 2010.
Just to excite you a little more, you may be able to file an amendment to your 2008 taxes (if you purchase soon) and receive the tax credit check in a few weeks.
Because everyon’s situation is different, I recommend that you speak to a CPA or tax professional to make sure that you are eligible for the First Time / Move-Up Home Buyer Tax Credit. You should also speak with a knowledgeable lender to make sure the home you desire to finance through the USDA RD program is in an eligible area.
If you are an Indiana homebuyer, I can help you into your next home. Just contact me at 219-695-0369 or email scott@nwiloanguy.com.
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