Dakota County has come out with a new program for first time homebuyers. It is a tax credit program called Give Yourself Credit. Along with the tax credit is the opportunity for down payment assistance.
The tax credit allows the buyer to take 20% of his mortgage interest deduction as a tax credit against his tax liability. This reduces the amount of federal income tax a homebuyer is required to pay and helps free up income to qualify for a mortgage loan. The credit can be claimed each year during the term of the mortgage as long as the property remains the homeowner's primary residence.
The income limits are $83,900 for 1 to 2 person households and $93,290 for 3 or more person households. The maximum purchase price is $276,870.
The down payment assistance is a loan with zero percent interest rate and no monthly payments required. The maximum loan is $10,000 for households with income at or below 50% of the median income. If your income is between 51% and 80% of the median income, you may get $7,500 in down payment assistance and if your income is over 81% of the median income limit, you can get 2.5% of the base mortgage amount for down payment assistance. The down payment assistance is paid back when the home is sold, the mortgage is paid off or if the home is no longer the primary residence.
Homebuyers using the Give Yourself Credit program may also use the one-time $8000 federal tax credit if you buy before December 1, 2009.
Several communities in the Minneapolis St Paul area are starting to come up with new programs for homebuyers. When you are looking, you may want to contact the different counties or cities to see if there is something new that would help you in purchasing a new home.