As bad as the media coverage is today about the home sales and mortgage markets, there’s never been a better opportunity to make a really great deal on a home, get low interest financing, and have the government participate in the purchase with some cash. There are a number of incentives in the form of relaxed rules as well as tax credits that home buyers enjoy today due to government efforts to prop up the economy, as well as to contribute to energy savings down the road.

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<center><b>Click the image to enlarge</b><br /><a href="http://www.fixr.com/infographics/home-buying-tax-credits.html"><img src="http://cdn.fixr.com/infographics/home-buying-tax-credits-md.jpg" alt="Home buying tax credits" border="0" /></a><br />Source: <a href="http://www.fixr.com" >FixR</a></center>

Home Buyer Tax Credits

Special home buyer tax credits have been extended for contracts through April 30, 2010 with closing by June 30, 2010. These credits can be in the form of a check if there isn’t enough tax liability for offset, and many home buyers are taking advantage, with the tax credit check going toward everything from debt reduction to new furniture.

• First Time Buyer Credit – for the home buyer who hasn’t owned a home within the last three years. This is a credit of up to $8000.
• Long Time Resident Credit – buyer’s must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence. This is a credit of up to $6500.
• Limits & Rules Applying to Both - the new law raises the income limits for people who purchase homes after Nov. 6. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
  Other limitations:
  • Dependents are not eligible to claim the credit.
  • If the purchase price of the home is more than $800,000, no credit is available.
  • On the date of the purchase, a person must be at least 18 years of age.

These credits are helping people to get into homes that might otherwise be unaffordable, and that’s helping to prop up prices and reduce foreclosure inventories.

• Combining a USDA Loan and the Credit for Cash in Hand - A little-publicized government loan program for rural areas, is the USDA Rural Loan Guarantee Program. This allows financing of up to 103% of a home’s appraised value in approved areas, and people are finding that negotiation with the seller to pay some of closing can actually get them into a home with no cash out of pocket. Combine that with a nice big tax credit check from Uncle Sam, and there’s a home out there for a lot of people who didn’t think they could afford one. This is especially true with the number of foreclosures, and the recent decision by the FHA to waive the 90 day flip rule. If an area doesn’t qualify for the USDA loan, the FHA is now an affordable and easier choice.

FHA & the 90 Day Flip Rule

Investors are rejoicing, and there will be more homes rehabilitated after foreclosure and placed on the market at affordable prices due to the waiver of the 90 Day Flip Rule. Basically, prior to this waiver, an investor couldn’t resell a home purchased and rehabbed within 90 days of the purchase. This discouraged fast repairs and remodels, as the costs of holding a property and risk of vandalism while empty discouraged investors. Now, buyers can take advantage of low FHA down payments and interest rates in the purchase of homes brought to satisfactory condition quickly after a foreclosure. More investors will be scooping up and rehabbing these homes.

Get Paid to Save Money on Energy

The U.S. government is serious enough about energy savings to pay homeowners to improve their structures and reduce their carbon footprint. All of these credits only apply if the improvements are made to the owners’ principal residence. There’s an interesting leverage of government help here. A buyer who gets the $8000 first time home buyer tax credit, could use that money to make energy improvements, getting more tax money back from the use of the IRS’s money! For details and requirements, visit energystar.gov.

• General Structural Energy Improvements – This is a 30% tax credit on a cost of up to $1500 for any combination of these improvements:
  • Biomass stoves
  • Heating, Ventilating & Air Conditioning (HVAC)
  • Insulation
  • Roofs
  • Water Heaters (non-solar)
  • Windows & Doors

• Special Systems – There’s no upper limit on the cost of these improvements, with a 30% credit.
  • Geothermal Heat Pumps
  • Small Residential Wind Turbines
  • Solar Energy Systems

• Residential Fuel Cells & Microturbine Systems – This is a 30% credit on up to $500 per .5 KW of power capacity. This sizing method allows the scaling of system size to suit the residence.

There are also still energy saving appliance rebates available in most states. The official map and links to the different state programs is at energystar.gov.

Those are the most highly publicized government programs for home buyers and homeowners. But, there are a myriad of other programs, even outright grants to help people purchase homes. HUD states that grants are not made directly to home buyers by the government, but instead are distributed through state programs which get those funds. Http://hud.gov is a huge website that devotes a great portion of the site to explaining programs that help home buyers and owners. A few of those mentioned include:

• Housing Counseling – on the site there is a list of housing counseling agencies approved by HUD to help in the understanding of the home buying process and how to qualify for a mortgage.

• American Dream Downpayment Initiative (ADDI) – All 50 states will receive some funding from HUD to help those who qualify with down payment assistance.

• http://GovBenefits.gov - a site devoted to helping citizens to access government benefits information and resources.

Help Goes to Waste if Not Accessed

All of these government programs and agencies are offering assistance in the purchase and improvement of homes. It’s too large of a segment of the American economy for government to leave to its own devices. As with most bureaucratic structures, it’s not always easy to find help, or to apply for it. The first stop should be the government websites that are focused on housing assistance.