How to Monetize the $8000 Tax Credit in New Hampshire
The stimulus package enacted by Federal Government in 2009 provides for an income tax credit for firs-time home buyers of ten percent of the sales price, up to a maximum of $8000. The credit is for the purchase of a new or existing home which must be purchased by December 1, 2009.
The $8000 tax credit is received by filing an amended return for 2008 or on the 2009 tax return. Buyers seeking FHA financing do not always have relatives capable of "gifting" the down payment. Several housing finance authorities have created special programs to "monetize" the tax credit to provide down payment and closing cost assistance for funds at the time of purchase. These short term loans can be complicated and must follow strict guidelines.
New Hampshire Housing provides a viable option to the short-term loans through the Home Advantage Program. This program gives home buyers the opportunity to "monetize" their federal tax credit with an interest free second mortgage up to $10,000. There are no monthly or interest payments and it can be paid off when the buyer receives their tax credit check if they choose to. It does not convert to a second mortgage and special FHA guidelines do not apply.
NHHFA Home Advantage Program Highlights
- Must be eligible for a mortgage through the Single Family Mortgage Program.
- Complete a first-time home buyer education course acceptable to New Hampshire Housing.
- Have household income that does not exceed 100% of statewide median income.
- Contribute at least 1% of borrowers own funds into the transaction.
- Have no more than $3,500 in liquid assets remaining after payment of down payment and closing costs.
- One and two unit residences, condominium units, or manufactured housing in a resident owned park or on land owned by the borrower (depending on mortgage insurer guidelines).
- Purchase price may not exceed the New Hampshire Housing Purchase Price limit.
Terms of Subsidy:
- Maximum subsidy amount is $10,000, non-amortizing and interest free.
- Rider or other lien is added to the mortgage stating repayment of subsidy if the property is sold or refinanced.
- Must be combined with New Hampshire Housing's current 0-point program.
- No cash back at closing.