What is the First Time Home Buyer Credit — and How Can I Get It?

Buying a home for the first time can be as stressful as it is exciting. A home purchase is a big financial decision, and it’s easy to get in your head about making mistakes as a first time home buyer that can cost you a lot of money. However, there are a few ways that you can mitigate your risk as a first-time buyer. One of the best ways to protect yourself financially is to find and use a First-Time Home Buyer Credit program!

What is the First Time Home Buyer Credit Program?

Following insecurities in the housing market in the late ’00s, Congress passed The Housing and Economic Recovery Act of 2008. This was a stimulus plan that — among other things — allowed first-time home buyers to receive a tax credit that would help cover the costs of buying a home. At the time, this credit was for 10% of the purchased home’s value, up to a total of $7,500.  Over the next few years, the legislature continued to tweak this program, raising the credit value to $8,000 and allowing first-time buyers to get the money either as a tax credit or as an interest-free home loan.


The purpose of these First-Time Home Buyer Credits was to allow more people to buy their first home. High levels of home ownership tend to be good for the economy — and ownership tends to be great for personal finances, too!  


Recipients of the First-Time Buyer Credit pay no interest on the loan and have a 15-year window to make good on the debt. The Internal Revenue Service created payment plans so new homeowners can budget these special loan payments into their other monthly costs. 


This program offered an amazing opportunity for people to start gaining the advantages of home ownership without having to worry as much about the high interest rates that were so common during this real estate bubble. 


It sounds almost too good to be true, right? Well, there’s a catch…

The First Time Home Buyer Credit No Longer Exists

If you’re like many people, you probably started dreaming about your home buying possibilities once you read that last section. Well, we hate to be the bearers of bad news, but this program is no longer an option for first time buyers. 


Once the housing market began to stabilize and home ownership rates picked up, the federal government let the tax credit program fade away and began collecting payments. There are some stipulations for people who closed on their home before 2010, but anyone looking to buy a home in 2021 will not be able to take advantage of the credit. 


Is There Another First-Time Home Buyer Credit?

The answer is maybe. There have been rumblings of another home buyer credit program coming since the election and inauguration of President Joe Biden, but nothing is set in legislation yet. 

The new Home Buyer Credit would once again seek to help first-time home buyers take advantage of the current, unique housing market. COVID-19 protocols affected real estate in a few significant ways (although not the ways that you might expect!), and a new credit would help open up the market to people who want to maximize their buying power. 


This could be great news for first-time buyers if it ends up coming to fruition. However, there is nothing in the books yet, so the details of any credit program are not known at this time. 


Luckily, there are other options for first-time home buyers! The federal government’s tax credit program may have ended in 2010, but many state and local governments have their own loan programs.

Which States Have First-Time Home Buyer Credits?

According to the financial wizards at Nerdwallet, almost every state has a home-buyer credit. So if you are looking to live in Washington DC on a budget, then you’re in luck — Washington DC, Maryland, and Virginia all have unique first-time buyer loan options to help get you started. This is in addition to special mortgage options like VA-backed loans or Doctor Loan Programs. Let’s break it down by each region: 


Unique Loan Programs for Washington DC

  • Home Purchase Assistance Program (HPAP): One of the stresses that comes with buying your first home is gathering the up-front funds necessary to cover your down payment, closing costs, and any other incidentals. Washington DC’s Home Purchase Assistance Program helps alleviate those stresses. This is a deferred-interest loan program that is exclusive to first-time buyers in the District who make up to 110% of the area median income. This assistance cannot be used to purchase investment properties — the home that you purchase must be your primary residence.
  • DC Open Doors: Similar to the HPAP, DC Open Doors aims to make home ownership more accessible by helping with down payment assistance. However, this program also offers full home purchase loans for qualified buyers! The loans to cover down payments feature deferred repayment programs, and their home purchase loans offer below-market interest rates. Most notably, DC Open Doors has programs for both first-time buyers and repeat buyers. This means that you can use their services when buying and selling a home at the same time.


Unique Loan Programs for Maryland


Mayland has several mortgage options for first-time buyers and repeat customers alike — but which one is right for you?


  • 1st-Time Advantage Loans: Of all the unique loan from the Maryland Mortgage Program (MMP), the 1st-Time Advantage Loans are designed to offer the lowest fixed interest rate. There are a few different loan options within this program, including both Down Payment Assistance and Home Purchase Loans, so make sure that you speak with a mortgage expert about which path is right for you.
  • Maryland SmartBuy: Due to fears of incurring too much debt, a lot of recent college graduates avoid buying a home. After all, buying a home while paying off student loans can be stressful…and that’s where Maryland SmartBuy comes in! So long as you meet the qualifications, SmartBuy financing will provide up to 15% of your home purchase price for you to use to pay off your student loans. Not only will you gain the benefits of home ownership, but you can put a hefty dent into your student debt, too!


Unique Loan Programs for Virginia

The Commonwealth of Virginia has a wide variety of unique loan options. The Virginia Housing Development Authority (VHDA) offers many different loan programs, including both loann options for first-time buyers and for those moving up to a more valuable home


In addition to Virginia Housing Conventional Loans, Federal Housing Administration (FHA) loans, and Veteran’s Administration Morgage programs, VHDA has unique programs to help with the costs of down payments, closing costs, and more. These can be an attractive alternative to options like Bridge Loans or Home Equity Lines of Credit (HELOC)

Which Mortgage is Right for Me?

There are a lot of mortgage options out there. Each one has its own pros, cons, and special qualifications. All told, it can feel very overwhelming to try to even figure out how to get a mortgageespecially if you are trying to buy (or sell) your home without a real estate agent!


You might know that having a great real estate agent on your side is key to finding and winning the right home. But it goes beyond that…the right agent will help you with the rest of your home purchase, too!


Have a question about closing costs on your home? A good agent will walk you through the process.


Not sure which neighborhood will offer the best commute for your Arlington VA job? Talk to your agent about it and find out everything you need to know about living in Arlington VA or one of the surrounding areas. 


And, of course, your agent can help you identify the best mortgage for your needs and means, too! At the Keri Shull Team, we work with a collection of high-quality local lenders, including an in-house lender with HyperFast Mortgage. With this archive of expert lending knowledge, we can identify and utilize the loan program that is perfect for you and your new home!

Are you interested in learning how you can find and win your dream home without breaking the bank? Just contact the Keri Shull Team today or fill out the form below to schedule a time with our real estate specialists!

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