Gov. Sonny Perdue signed on Monday Bill 261 into law.  The law offers a tax credit of 1.2 percent of the purchase price of a single-family home currently on the market.  The credit tops out at $1,800 and will be taken over three years.  Georgia taxpayers have six months starting now to qualify for up to $1,800 in income tax credits by buying a home.

For first-time home buyers, the state credit would be in addition to a federal credit offered through the federal stimulus act.  That credit is worth up to $8,000.  The new state credit, however, applies to any home buyer, not just first-timers.  Read more about the $8,000 federal tax here.

FHA loans have been around since 1934 but in previous years we haven’t needed them with all of the other financing options available.  With the recent tightening of credit terms, FHA loans are back and can be a great option for buyers who might not otherwise be able to purchase a home.  FHA  stands for Federal Housing Administration.  FHA doesn’t actually lend the money but insures the loan for your lender.   There are caps on the amount of an FHA loan and it is based on the lending area.  In Metro Atlanta – the loan limit is $346,250.   The loan limit does change from time to time and it can be higher in more expensive markets and less in lower priced markets.  As of today - the FHA rate was VERY competitive – 4.5% for a year 30 year fixed compared to 4.375% for a non-FHA loan.  

Advantages of FHA loans:

• Down payment as little as 3.5% of the sales price.  Most conforming loan programs require a minimum of 5% down.
• Lower credit scores for buyers.  600 minimum
• Easy qualifying guidelines. Gift/Grant funds may be allowed for down payments.
• Non-occupying co-borrowers allowed.  Perfect for a buyer just starting out in the job market and who may not yet have established credit.  A parent can co-sign the loan and not have to live in the property!
• Seller Contributions can be up to 6% of the sales price.  Helps a buyer who is short on cash as a seller can contribute towards closing costs &  pre-paids (interest, property taxes) also called escrows.
• Has a fixer- up loan program.  Great option for some of the homes presently on the market.
• You may even be able to include energy improvements into an FHA-Efficient Mortgage

FHA loans aren’t for everyone but a great opportunity for many buyers.  FHA website has more information for you or contact me  and we’ll find a lender who will help you decide which loan program is best for you.