If you want to purchase a home for the first time, or want to buy a second home, you can opt for a mortgage loan. You need to have some basic criteria to get your loan approved by the mortgage lenders. One of such important criteria is that you have to put down 20% of the home value as down payment, from your own pocket. If you don’t have the money for down payment ready, you can apply for home buyer tax credit.

Amount of loan you can get as tax credit

You will get a home buyer tax credit that will be equivalent to 10% of your home purchase value. However, the maximum limit of tax credit is upto $8,000 for the first time home buyers and $6,500 for those who are buying a second or a third home. If you owe back taxes to the IRS, you will get an amount as your tax credit after deducting that debt balance from your total tax credit. If an amount of your tax credit is unused, it will be refunded as a check to you. You don’t have to repay this credit if you stay in your home for three years or more. However, if you sell your home before three years you have to repay this credit amount. A first time home buyer means you don’t own a home of your own for the last three years.

Eligibility criteria for getting tax credit

To be eligible to get this tax credit, you need to fulfill certain criteria. They are:

• Time limit: To take advantage of this offer, you have to buy your home within 7th November’2009 to 30th April’2010. You have to do your closing by June’2010.
• Type of home and price: You can apply for home buyer tax credit if the home you are buying is going to be your primary residence. Your home can be a condominium, single family house, cooperative, townhouse or it can be a houseboat or a mobile home also. The price of the home should not exceed $800,000. You cannot get tax credit for rented or vacation homes.
• Income limit: If you are a single buyer, you will be eligible for tax credit if your annual income should be within the range of $125,000 to $145,000. If you are married and jointly applying with your spouse to buy the house, your income should be within a range of $225,000 to $245,000.
• Forms needed: If you are a first time home buyer, you have to fill out Form 5405 with your federal tax return. If you are a current homeowner, you have to fill out federal tax Form 1040 or 1040A to include your property tax deduction.

If you’re using an FHA loan, you can take help of home buyer tax credit for your down payment. You should take advice from your tax advisor to find out whether or not you are eligible to get home buyer tax credit, before you apply for it.