How to get an INTEREST FREE LOAN from the Government

US Government building

It seems like every couple of days I hear about the government bailing out this company or giving this other company a loan. I am to a point that I want to know what I have to do to get a government loan.  Because after all if the government is giving out money …. I want some too.

You probably have not heard that you may qualify to receive an INTEREST FREE LOAN from the government. Why?  Because bad news SELLS and GOOD news well it is just not as exciting.

Now, I don’t qualify for the interest free loan since I am not considered a “first-time home buyer”. So I am still going to be waiting for my money.  But if you DO meet the government’s definition of a first-time home buyer, you can get a 15 year interest free loan up to $7,500. I know its not as good as FREE money since the money has to be paid back. Although, it is still a sweet deal.

The interest free loan is called the “first-time home buyer tax credit” and it is part of the Housing and Economic Recovery Act of 2008. The Recovery Act was designed to give housing a shot in the arm and a reason for buyers to purchase a home.

So who is considered a first-time home buyer? A buyer who has not owned a principal residence within the last three (3) years.

What are the other requirements?

  • You have to purchase a resale or new home between April 9, 2008 and June 30, 2009
  • Don’t exceed modified adjusted gross income levels. The entire $7,500 loan is available to individual tax payers with modified adjusted gross income of $75,000 and $150,000 for married taxpayers. A portion of the $7,500 loan is available to individual taxpayers and married taxpayers with a modified adjusted gross income of $95,000 and $170,000 or higher, respectively.  If your modified adjusted gross income levels are higher than the amounts above, the government has decided you are doing fine on your own and you do not need their loan.

How do you actually get the first-time home buyer tax credit (A.K.A. “Interest Free loan”)?

Take the tax credit on your federal income tax return. 

  • If you purchase a home in 2008,  take the tax credit on your 2008 tax return.
  • If you purchase a home in 2009, before you file your federal income tax return for 2008, take the credit on your 2008 return. You do not have to wait until your 2009 return to file for the first-time home buyer tax credit.
  • If you purchase a home in 2009, after you filed your 2008 tax return, take the credit on your 2009 tax return.

The tax credit has to be paid back to the government over 15 years which would $500 a year. But the GOOD news is that your first payment does not begin until two years after you claimed the tax credit. For instance if you file for the tax credit on your 2008 return,  your first $500 repayment does not occur until you file your 2010 return.

Now I know if you are a first-time home buyer, this all has to sound very confusing. You are right, it is confusing. But DO NOT let that stop you from getting an interest free loan to help you with your real estate purchase. Call us, Rick Ratchford at 281.300.3141 or Jill Wente at 281.804.8626 (Spring Texas Realtors) and we will help you understand how you can take advantage of this program.

After all, the majority of government programs are confusing. And its obvious to me why people don’t take advantage of them. The government programs are either too hard to figure out OR the people that qualify for them have not heard of them. 

Read also: