Earlier this year, Congress passed the American Recovery and Reinvestment Tax Act of 2009 (”2009 Tax Act”). In division B, Title I, Section 1006, there is a provision for a First Time Homebuyer Tax Credit (Form 5405) up to $8,000 or 10% of the purchase price. This act provides for an exception for principal residences purchased between January 1, 2009, and November 30, 2009, which enables a first time homebuyer to receive the tax credit with no repayment required if the homebuyer occupies the property for 3 years. The 2009 Tax Act also provides for use of this credit with loans purchased with proceeds of tax-exempt mortgage revenue bonds. Therefore, this credit can now be used with THDA’s mortgage programs.
The Tennessee Housing Development Agency now has a new second mortgage program, the THDA Stimulus Loan Program, for downpayment and closing cost assistance. This program will complement THDA’s existing Homeownership Choices incorporating the tax credit. In order to be eligible for the second mortgage program, THDA MUST be providing funding for the first mortgage through the Great Rate or Great Advantage programs for the borrower(s) to purchase the home. Both the first and second mortgage must close on or before November 30, 2009. The November 30, 2009, date also applies to new construction. The new home must be complete and the loan closed on or before November 30, 2009. Read the full details.