Thursday, January 8, 2015

Lower Your Federal Taxes, Every Year, For the Life of Your Loan

Maryland HomeCredit Program

Lower Your Federal Taxes, Every Year, For the Life of Your Loan

Maryland HomeCredit can save a homebuyer tens of thousands of dollars over the life of a home loan, and makes owning a home more affordable. Together with a home loan through the Maryland Department of Housing and Community Development's (DHCD's) Maryland Mortgage Program (MMP), which offers Down Payment Assistance and the certainty of a 30-year fixed interest rate, the State of Maryland is making the dream of sustainable homeownership a reality for more Marylanders than ever.

To get started, contact one of our approved MD HomeCredit lending partners today.

You may already know about the mortgage interest deduction that most homeowners already claim each year on their federal taxes. The Maryland HomeCredit Program is different, and provides a federal tax credit to eligible homebuyers. A tax deduction reduces the homeowner’s “taxable income”. In contrast, a tax credit, such as the Maryland HomeCredit, provides the homeowner with a reduction in their actual federal tax liability.
DHCD's Maryland HomeCredit Program provides eligible homebuyers with a federal tax credit that may be claimed annually, the value of which is equal to 25% of the value of mortgage interest payments (up to $2,000) paid each year, for the life of the loan (i.e. until payoff, sale, refinance or transfer).

How to Get a Maryland HomeCredit

Homebuyers apply for a Maryland HomeCredit through an approved mortgage lender.  The Lender will confirm the borrowers' eligibility for this program, and submit an application to the Maryland Department of Housing and Community Development (DHCD).

Who Can Get a Maryland HomeCredit?

To get a HomeCredit, you must be purchasing a home in Maryland and meet borrowing criteria that include:
  • You must meet the same income limits and home purchase price limits as the Maryland Mortgage Program;
  • You cannot have owned a home during the past three (3) years, UNLESS you are purchasing in aTargeted Area;
  • The home  you purchase must be your primary residence.
 NOTE - the Maryland HomeCredit Program is not available for refinances or existing homeowners

Calculating the Value of an Maryland HomeCredit

The size of the tax credit received by a homeowner with a HomeCredit is 25% of that year's mortgage interest payments, up to a maximum credit of $2,000 in any single year. 
Note that the actual net savings due to the HomeCredit are likely to be less than the face value of the tax credit, since the value of the of interest payments associated with the tax credit (25% of total interest payments) cannot also be used as a standard mortgage interest deduction. 
The following example shows a typical calculation:
Our downloadable calculator can help you estimate how a Maryland HomeCredit can provide you with savings over the life of a loan. 

Maryland HomeCredit Fees


GET STARTED - Talk to an Approved Maryland HomeCredit Lender