Here are some updates to an earlier post I made on the newly extended California home buyer tax credit.  That post did not have all the details but this should have more.

Starting May 1st, the state of CA will award $200 million in state income tax credits to home buyers.   Here are some details of the credit:

• Worth up to $10,000 spread over 3 years
• Credit is available to anyone who buys a newly built home and first time buyers who buy and existing home or newly built home
• To get the full $10,000 credit over three years, a home buyer must owe at least $3,333 in state taxes each year
• A first-time buyer is defined as an individual, or an individual’s spouse, who had no ownership interest in a principal residence for three years before the date of purchase
• The home must be used at your principle residence for at least 2 years
• The credit is worth 5% of the purchase price or $10,000, whatever is less.  So if you bought a home for $100,000, you would only get at $5,000 tax credit.  But if you bought a house for $200,000 and over you would get the full $10,000 tax credit.
• Buyers of existing homes must close on the house between May 1st 2010 and Dec 31st 2010
• Buyers of new homes must enter into contract between May 1st 2010 and Dec 31st 2010, but have until Aug 2011 to close
• Last year the tax credits were on a first come first served basis.  This year the Franchise Tax Board existing home credits will run out by June 30th (so you need to move fast!!!).  Once all the credits are allocated, the program will end.
• The California credit goes into effect the day after the federal tax credit is set to expire

In 2009, the state of California approved $100 million in state tax credits for people who bought a newly built home starting March 1, 2009.  Last year’s credit was also worth up to $10,000 spread over three years but was good ONLY for brand new homes, not existing homes. The credits, which were allocated on a first come, first served basis, ran out in less than four months, and the Franchise Tax Board stopped awarding them July 2.  So the moral of the story is you need to really buy between May and July and file for your credit really fast to make sure you get it.

The summary is you will pay $10,000 less in state taxes over the next three years if you fit into this program. 

Here are some of the benefits of using FHA financing:

• FHA loan interest rates on the 30 year fixed loans are still ridiculously low!
• Maximum FHA loans in many parts of California go up to $729,750. So you can get FHA loan on a condo in places like San Francisco, Los Angeles, San Diego and Orange County with 3.5% down up to a $729,750 FHA max loan amount
• FHA loan credit score does not have to perfect, but it does help if your score is 620 or above
• FHA loan down payment is only 3.5% and that can be a gift from a relative
• FHA loan approval is a lot easier than conventional loan approval.  You can have a lower credit score, higher back end debt-to-income ratio, and still get 30 years fixed rates as good as conventional loans!

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)

858-922-7899

homeloan8@gmail.com

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