Extended Home Buyer Tax Credit 2009/2010

On Nov. 6, 2009, President Obama signed the Unemployment Compensation Extension Act (H.R. 3548) into law. It included, as an amendment, an extension and expansion of the Homebuyer Tax Credit to aid more people in buying a home. All changes in the bill became effective on Nov. 6 2009, the day the bill was signed.

The Homebuyer Tax Credit was extended for first time home buyers who sign a binding contract by April 30, 2010 and close on the purchase by June 30, 2010; and expanded for home buyers to include a $6,500 credit for current homeowners who purchase a new primary residence. Under the terms of the legislation, "current" homeowners must have used the home they have sold, or that is being sold, as their primary residence consecutively for five of the past eight years. In addition, other eligibility requirements apply, including income limits.

A portion of the overall economic stimulus plan, the current tax credits are an extension and expansion of the original first time home buyer tax credit that was due to expire in November 2009. They are only available for a short time and are not likely to be offered again. But it is more than just the tax credits that make this a great time for home buying.

For first home buyers, there is the option of an FHA loan that may allow you to put down a smaller down payment than would be required with a traditional loan. Plus, the Federal Housing Administration (FHA) allows first time home buyers to monetize their tax credit for use toward the purchase cost of an FHA-insured home, as an additional down payment or toward closing costs. This allows first time home buyers to benefit from the federal tax credit at the time of purchase, instead of waiting until they file their tax return.

All home buyers benefit from other current market conditions such as lower home prices, an abundance of homes to choose from and interest rates that are near historic lows.