The New Hampshire Housing Finance Authority (NHHFA) has a program that can save many home buyers thousands of dollars in federal income taxes during the life of their loan. The program is called the Home Start Homebuyer Tax Credit Program.
It provides participants with a “home buyer tax credit”… also known as a Mortgage Credit Certificate (MCC).
Participation is available to eligible first-time homebuyers, as well as existing home owners who purchase properties that are located in certain designated communities.
What do applicants have to do to start saving?
Well, first and foremost, there are eligibility requirements:
- The program is designed to assist low- and moderate-income consumers, so their are limits on the applicant’s income and the purchase price of the property (click here);
- The applicant must be a first time home buyer, except there are fifteen (15) ‘target’ communities where the requirement does not apply, and consumers who have previously owned a home may still qualify for the tax credit. (NOTE: these communities are Berlin, Claremont, Concord, Dover, Goffstown, Laconia, Lancaster, Littleton, Manchester, Newmarket, Pittsfield, Portsmouth, Rochester, Somersworth and Whitefield)
- The property to which the tax credit is being applied must be a single family home and serve as the participant’s primary residence;
- The participant can benefit from the program for the life of the original mortgage (no refinances) and as long as they are still paying mortgage interest;
- The mortgage loan to which the tax credit is being applied must be a new loan (it cannot be applied to an existing loan);
- The applicant must complete a 20-minute on-line training session
- The applicant must submit a completed MCC application to NH HFA within the first 14 days after closing on the mortgage
Assuming the applicant meets the program eligibility requirements, the next question is: how does the program work?
The program actually provides the participant with a dollar-for-dollar tax credit against the mortgage interest being paid… up to a maximum of $2,000 annually. So it is not a tax deduction, where you would reduce the income you claim by $2,000 and realize a tax savings of, say, $500… this program will actually put $1 back in your pocket for every $1 you pay in mortgage interest, to a maximum of $2,000/yaer.
An added benefit to this particular program is Home Start participants do not have to wait until the start of the subsequent year (when they file their federal tax return) to realize the benefits of this program. The program allows participants to adjust their payroll tax withholdings – in that way they are able to increase their weekly “take-home pay”. The increased earnings allows participants to qualify more readily for a mortgage, and for a larger mortgage than they might otherwise qualify. Participants can then use the extra money to help make the mortgage payment.
Disclaimer: I am neither a tax advisor nor an attorney. Consumers are urged to speak with their attorney, their tax advisor or their mortgage broker about the program and how they may benefit from it.