Homebuyer Programs

I used to think that the first time home buyer programs provided only funds for closings and downpayments. Turns out I was wrong. While there is a significant amount of money available where I live, there are many programs available, some of which reduce interest.

My county has a program with an initial fee, which you can negotiate for the seller to pay, and provides you with an income reduction. Whatever the amount you pay in mortgage interest, 80% of the total goes to reduce your income; if you earn $50K on your W-2's, and had paid $10,000 in mortgage interest, your income is reduced by $8,000, so down to $42,000, not counting any other deductions you have that would reduce your income. One you calculate your tax liability, the other 20% of what you paid in mortgage interest goes to reduce that liability; if you end up owing money, that amount would be reduced by $2,000 in my example.

While this may not mean much with the stimulus credit of up to $8,000 for those who buy homes this year, it isn't limited to one year; this program lasts as long as you own your home.