While many real estate professionals and home buyers were hoping for a $15,000 tax credit for all home buyers without income caps that was introduced in the Senate unfortunately the final bill only includes an $8000, tax credit for first time home buyers that earn less than $75,000 per year ($150,000 on a joint return).
- Individuals with incomes between $75,001 and 94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit.
- Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit.
The bill allows Fannie Mae and Freddie Mac to once again purchase and guarantee loans of up to $729,750 in high-cost areas such as Manhattan. This applies to purchases after Jan 1, 2009 until December 1, 2009.
$729,750 is approximately 80% of $912,000. $729,750 is approximately 85% of $858,000. Most coops require a minimum of 20% down and although condos only require 10% down most lenders currently are requiring a minimum of 15% down.
Loans for more than $729,750 are called jumbo loans. Interest rates are much higher on jumbo loans. Because of the credit crises jumbo loans are harder to qualify for and rates are rising. Jumbo loans are not backed by the government they have been sold on the secondary market and there are less investors interested in them these days.
So while most buyers in Manhattan including first time buyers may not be eligible for the tax credit because of higher incomes in New York, the increase to the high conforming amount back to $729,750 will cost much less than a jumbo loan. Jumbo loans are currently difficult to acquire. High down payment (50%) are required on loans above $1 million.
To find out how much you qualify for click here for a free mortgage consultation and pre-approval.