Proposed Mortgage Tax Credit Could Help FHA Borrowers
March 22, 2024
President Joe Biden has floated an idea that could make it much more affordable to buy a home, especially in the current interest rate environment which is still (at press time) trying to find its way to a recovery.
The President’s proposal? A two-year tax credit potentially worth up to $10k per homeowner. These tax breaks would, if approved, be aimed at those buying starter homes and those who qualify as first-time homebuyers.
The Motivation for the Home Loan Tax Credit Proposal
2023 was named the “least affordable” year to buy a home according to RedFin. A CNBC report notes, “In 2023, those making the median U.S. income of $78,642 would have spent 41.4% of earnings by purchasing a median-price home at $408,806, up from 38.7% in 2022...”
Add to that the fact that, according to Whitehouse.gov, a large number of homeowners have home loans with interest rates lower than those currently available. That can make owners less willing to sell even if they are unhappy with their current property.
President Biden notes there’s a general expectation that mortgage rates and inflation will both begin falling. “But I’m not waiting,” Biden says, noting that his proposal would basically serve a similar purpose as a lower interest rate.
How the President’s Mortgage Relief Credit Works
With the caveat that this proposal has not been approved at press time, the basics of the plan include a $5k tax credit offered to first-time homebuyers two tax years in a row.
That, according to White House sources, would be the equivalent “to lowering the mortgage interest rate for a median-price home” by approximately 1.5 percentage points over the full two years of the tax credit.
Another Aspect of the Tax Credit Plan
The Biden proposal also calls for a one-year tax credit for those who currently own starter homes and want to sell them. The starter home sale option would be worth up to $10k for “middle class families” who want to sell to another borrower who wants to use the property as their primary residence.
What defines a starter home? In this context, houses would qualify for the tax credit if they are priced below the average house sale price in that county.
This Plan Is not yet Approved
At the time of this writing, the Biden proposal is nothing more than a draft, an idea that could be developed into policy. For now, it’s just an idea, but when there’s an election year running chances are strong that this could eventually turn into official policy.
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RELATED VIDEOS:
Consider the Benefits and Risks of a Joint Loan
Borrowers Should Know About the Origination Fee
Everyone Needs to Pay Their Property Tax
The President’s proposal? A two-year tax credit potentially worth up to $10k per homeowner. These tax breaks would, if approved, be aimed at those buying starter homes and those who qualify as first-time homebuyers.
The Motivation for the Home Loan Tax Credit Proposal
2023 was named the “least affordable” year to buy a home according to RedFin. A CNBC report notes, “In 2023, those making the median U.S. income of $78,642 would have spent 41.4% of earnings by purchasing a median-price home at $408,806, up from 38.7% in 2022...”
Add to that the fact that, according to Whitehouse.gov, a large number of homeowners have home loans with interest rates lower than those currently available. That can make owners less willing to sell even if they are unhappy with their current property.
President Biden notes there’s a general expectation that mortgage rates and inflation will both begin falling. “But I’m not waiting,” Biden says, noting that his proposal would basically serve a similar purpose as a lower interest rate.
How the President’s Mortgage Relief Credit Works
With the caveat that this proposal has not been approved at press time, the basics of the plan include a $5k tax credit offered to first-time homebuyers two tax years in a row.
That, according to White House sources, would be the equivalent “to lowering the mortgage interest rate for a median-price home” by approximately 1.5 percentage points over the full two years of the tax credit.
Another Aspect of the Tax Credit Plan
The Biden proposal also calls for a one-year tax credit for those who currently own starter homes and want to sell them. The starter home sale option would be worth up to $10k for “middle class families” who want to sell to another borrower who wants to use the property as their primary residence.
What defines a starter home? In this context, houses would qualify for the tax credit if they are priced below the average house sale price in that county.
This Plan Is not yet Approved
At the time of this writing, the Biden proposal is nothing more than a draft, an idea that could be developed into policy. For now, it’s just an idea, but when there’s an election year running chances are strong that this could eventually turn into official policy.
------------------------------
RELATED VIDEOS:
Consider the Benefits and Risks of a Joint Loan
Borrowers Should Know About the Origination Fee
Everyone Needs to Pay Their Property Tax
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