Tax Credit Loan Program

What is the First-time Homebuyer Tax Credit?

In 2008, Congress created the first-time homebuyer tax credit as a method of encouraging new homebuyers to purchase a home. The program provides up to an $8,000 tax credit for first-time homebuyers who purchase a home before December 1, 2009. The homebuyer must live in the home for at least 36 months, or they will be required to repay the tax credit to the IRS. Additional information regarding the federal first-time homebuyer tax credit can be found at www.federalhousingtaxcredit.com

What is the Tax Credit Loan Program?

In many instances, the biggest barrier facing first-time homebuyers is saving the money for the down payment and closing costs. Because the federal first-time homebuyer credit can only be claimed after the homebuyer purchases the home, the credit cannot be used to cover the down-payment and closing costs associated with the purchase of a home.

Because of the need for down payment and closing cost assistance to purchase a home, MFA has created the “Tax Credit Loan Program”. The Tax Credit Loan Program provides a first-time homebuyer with a loan of 8 percent of the sales price or $6,500, whichever is less, to cover the down payment and closing costs associated with purchasing a home. After loan closing, the homebuyer may file for the federal first-time homebuyer tax credit and use the tax refund to pay off the Tax Credit Loan.

As long as the homebuyer pays off the Tax Credit Loan prior to June 30, 2010, the homebuyer will not have to pay any interest on the loan. If the borrower chooses not to pay off the Tax Credit Loan by June 30, 2010, the loan will convert to a 30 year, fixed rate second mortgage that requires a modest monthly payment.

The Tax Credit Loan Program is paired with a safe, 30 year fixed rate MFA first mortgage loan, which provides long-term, sustainable homeownership.

The Tax Credit Loan Program is available statewide to first-time homebuyers who have not owned a home for the past three years. The program is available through a statewide network of Participating Lenders, which are listed on the back of this fact sheet. The Participating Lender will coordinate the loan process and answer any questions you may have regarding the program.

Are there Restriction to the Program?

Your annual household income, before taxes, may not exceed limits listed below, based on family size and property location. In some cases, slightly higher annual household income limits might apply

The Tax Credit Loan Program can be used to help purchase a variety of homes, including single-family attached and detached homes, town homes, condominiums, homes in planned unit developments, and permanently attached manufactured homes. The sales price of the home may not exceed the Acquisition Cost Limits listed below, unless the home is in a Targeted Area. See the Mortgage$aver Program fact sheet for targeted area household income limits and targeted area acquisition cost limits.

Income Limits

If you are interested in purchasing a new or existing home in New Mexico
and would like to apply for any of MFA’s programs, please contact one
of the MFA qualified lending institutions.