Home buyer incentives in post tax credit era

Did you miss the first time home buyer tax credit?

by Dan Krell © 2010

So, you want to buy a home but you’re disappointed that you missed out on the first time home buyer tax credit. Don’t worry, what I’m about to tell you about available down payment and closing cost assistance programs may be enlightening. In some cases, the total down payment and/or closing cost assistance you obtain from all sources may exceed the $8,000 offered as the first time home buyer tax credit.

Although some of these programs sound too good to be true, they’re not meant to be kept secret. In fact, they are meant to assist as many first time home buyers as possible. Sources that offer first time home buyer assistance programs include mortgage lenders, local home ownership programs; and governmental sources.

Did you know that some mortgage lenders are offering first time home buyer assistance programs? Of course, lenders want your business; but as an incentive, they are offering first time home buyer downpayment and closing cost programs. One such program is extended through the Federal Home Loan Bank of Atlanta (fhlbatl.com). Local affiliated lenders offer FHLB’s first time home buyer program by providing matching funds up to $7,500 for down-payment and closing-cost assistance to low- and moderate-income homebuyers. FHLB should be contacted for availability, guidelines, as well as local affiliates participating in their program.

Locally, the Housing Opportunities Commission (hocmc.org) administers Montgomery County’s home ownership program. Besides making available special rates for an FHA mortgage, the HOC offers the “5 for 5” program; which extends down payment and closing cost assistance as a ten year second mortgage. The program provides the home buyer up to 5% of the purchase price (up to $10,000) at a 5% interest rate.

Maryland’s home buyer program, the Maryland Mortgage Program (mmprogram.net), is administered through the Maryland Department of Housing and Community Development. The MMP is actually comprised of three programs. Besides making available the widely used CDA mortgage program, which offers low interest rate mortgages, the MMP also provides a down payment and closing cost program as well as partner matching contribution programs.

In addition to the Downpayment and Settlement Expense Loan Program (DSELP), which is a 0% interest loan up to $3,500, the MMP also includes partner match programs (The “Builder/developer Incentive,” the “House Keys 4 Employees” and the “Community Partner Incentive Program ”) that will match contributions up to $5,000. The matching contribution is a deferred loan to be repaid at 0% interest and is provided in addition to any DSELP funds.

Although the home buyer tax credit is now history, other opportunities exist for down payment and closing cost assistance. In addition to the programs mentioned above, you should remember to have your real estate agent negotiate a seller closing cost contribution ; most mortgages allow for up to a 3% seller contribution. However, you should check with your lender to see if such a contribution is allowed or if there are other limitations.

As you would imagine, taking part in lender and governmental programs require you to meet specific guidelines that typically include (but not limited to) the use of participating lenders, attending home ownership counseling, and meeting income requirements. For more information about these programs and qualifying requirements, you should contact their corresponding offices as program funding can be limited as well as subject to change without notice.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 17, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.