Making the most of home buying incentives

Buy, buy, buy, is the mantra of Realtors and mortgage brokers across the country. With housing prices stalled, or worse, falling in many regions, how will individuals be able to purchase if money for a down payment is an issue?

To help offset this problem the federal government is trying to push-start housing sales by broadening the use of the housing credit.

The federal stimulus package allows a maximum $8,000 tax credit, which can be used up front for a down payment for first-time homebuyers who purchase a home through November 2009.

In the past most buyers wouldn't receive funds until after filing a tax return. This deterred some people from using the credit, according the National Association of Realtors.

Home buyers can now access the funds immediately due to changes at the federal level.

Several banks and mortgage companies are creating a bridge loan in conjunction with the mortgage for individuals who qualify for the housing credit. This allows for the buyer to borrow against the credit to facilitate the purchase of a home.

However, the Florida House in an effort to stimulate the state's economy, created a $30 million program called Florida Homebuyer Opportunity Program.

"The state is effectively fronting the cash so the homebuyer can afford to make the down payment," said Rep. Brad Drake. "This is an interest free loan that will be repaid when the housing credit is received."

This is good news for anyone wanting to buy a home while prices are low.

The $30 million will be divided among every county in Florida and processed through the existing State Housing Initiative Program, also referred to as SHIP. It is unknown how much Walton County will receive.

Although SHIP has strict income limits, these won't apply for first time home buyers looking to take advantage of the program.

"It's so new," said Ken Little, director of Walton County Citizen Services. "All I know is that we have been told more money is coming to SHIP."

Aside from the housing opportunity created for Florida residents, SHIP offers other assistance to first time home buyers as well.

SHIP allows up to $10,000 to qualified individuals for down payment and/or closing costs, or for principle reduction. With this program income limits determine qualification, along with credit worthiness.

"Currently the program maximum income is 120 percent of HUD's median income for any given region," Little said. "That is approximately $47.9 thousand for Walton County."

When SHIP makes the loan it is interest free and due in full when the house is sold or changes title within 12 years of the loan.

"This is a good program for people looking to establish roots," Little said. "Then the loan is basically free money."

Funding for SHIP is limited. Each year counties across Florida are allocated a set amount, determined by population.

Walton County received approximately $500,000 for the home ownership program this year.

SHIP is a first-come, first-served basis. A waiting list exists and new applicants are added to that list. Money from FHOP will also be first-come, first-served.

"Help is out there," Little said. "Individuals need to ask the banks and mortgage brokers where the money is. Then it's up to the individual to follow through and make that first home purchase. The dream of home ownership isn't dead."