The First Time Buyers Federal Tax Credit of $7,500 is still available, but as of right now, only for a limited time. To take advantage of this credit, buyers will need to close escrow on a home by July 1, 2009.

An FHA Loan is the Perfect Program for an Orange County, CA First Time Buyer

FHA only requires a 3.5% down payment. That means that an eligible First Time Buyer would be able to recoup most of the down payment by applying for the Tax Credit. Also, FHA allows the down payment to come from a 401K. If a buyer borrowed money from their 401K, they would be able to quickly pay back the loan with the tax refund.

The $7,500 tax credit is available to singles as well as married couples. The home being purchased must be the buyers Primary Residence. It cannot be a second home or investment property. A single buyers annual income need to be $75,000 or less to qualify for the full benefit. Between $75,000 and $95,000 the buyer would qualify for an amount less than $7,500. For a married couple, the annual income need to be below $150,000 for the full benefit and below $170,000 for a reduced benefit.

As written right now, the tax credit is actually a long term 0% interest loan from the government. It is repaid over a 15 year period at $500 per year, beginning the year after taking advantage of the benefit.

Potential Improvements May be Coming for the Home Buyer Tax Credit

Congress may be close to turning this program into a true Tax Credit. Part of the latest stimulus package in congress is a change that would make the Tax Credit an actual credit with no repayment. There's a good chance that buyers who have already taken advantage of the credit in 2008, or who close before a change takes place, will still get relieved of repayment of the credit if, or when, the change occurs. As of yet there is no word on whether the credit will be extended beyond July 1, 2009. So now is the time to take advantage of this excellent program.

To find out more information on this program, or to find more information on FHA loans and how they work, it is important to talk to an expert FHA Loan Officer. It is important to get PreQualified and PreApproved prior to looking for a home and then making any offers. Buyers need to have a good idea of what they can afford before they fall in love with a home that is completely out of their price range.  I qualified Loan Officer can quickly prepare loan scenarios that will give a buyer a good idea of what they qualify for.

Authored by Tim Storm, Senior Loan Officer with Frost Mortgage, located in Orange County, CA. Frost Mortgage is a Direct Endorsed FHA Lender, meaning all processing, underwriting, and funding is done by our company. Tim Storm has 20 year experience closing FHA loans and working with First Time Home Buyers in Orange County, CA and surrounding counties of Riverside, San Bernardino, San Diego, and Loan Angeles. For information please call 877.786.4243 x 7.