Ohio's Mortgage Tax Credit
Ohio’s mortgage tax credit comes through the Ohio Housing Finance Agency. This tax credit provides homebuyers with a direct federal tax credit on part of their mortgage interest and can lower tax liability up to 40 percent. This credit cannot equal more than the home buyer’s annual federal income tax liability after deductions exemptions and other credits they qualify for.
In order to use the Ohio Housing Finance Agency’s mortgage tax credit, a home buyer must owe money on their yearly taxes. This non-refundable credit is additional to the IRS home mortgage interest deduction.
The total amount of the credit each home buyer receives is determined upon the location, property under the mortgage, and the type of mortgage. Here is a description of each credit available to homebuyers:
Mortgage Tax Credit Plus
The tax credit plus program is available to any first-time home buyer that carries a mortgage loan through the Ohio Housing Finance Agency’s first-time homebuyer program. The buyer will receive a tax credit of 40% of the mortgage interest up to a maximum amount of $2000. This credit can also be paired with 2.5% down payment assistance.
Mortgage Tax Credit Basic
The tax credit basic program is available to any home buyer purchasing a home through a different lending organization. If a buyer is purchasing a bank-owned property ( home in foreclosure) they can qualify for 30 percent credit of the purchase price of the home. If they purchase a home in a target area they can qualify for a 25 percent credit or 20 percent credit for all other properties.
Requirements for Home Buyer Eligibility
A home buyer is eligible for one of the above credits if they:
- Have not purchased/owned or had an ownership interest in their primary residence in the last three years
- Meet debt to income ratios for the loan type
- Meet income and purchase price limits: these vary by county and also vary with the number of people in the family and whether the property being purchased is in a target area. This can be addressed with your lender.
- Must have a qualifying credit score if using Mortgage Tax Credit Plus: for homebuyers using conventional, USDA, and VA loans a buyer must have a credit score of 640 or higher. For FHA loans a buyer needs a credit score of at least 650.
- Take a Homebuyer Education Course if Using Mortgage Tax Credit Plus: Qualified mortgage tax credit plus buyers are required to take a free homebuyer education course. The course can be offered by an approved agency of the U.S. Department of Housing and Urban Development also known as HUD. This course is not to be completed until after a buyer has submitted a loan application.
If you are interested in purchasing a home and have not owned a home in the past three years it is worth checking into your qualifications for this credit. Please ask us for more information. We would also love to help you find a home in one of the tax credit target zones.
We are here to help make your dream of buying a home in Columbus or surrounding neighborhoods a reality. Contact us anytime.
Additional: 4 Scams to Know About During COVID
Post a Comment