There are steps to follow when applying for a buyer grant. First, find a homebuyer grant that fits you. Then, check the requirements of that grant program. Finally, find an approved lender and fill out all the application forms correctly. The HUD website is a great resource for buying a home, whether it’s your first or your tenth. (For specific HUD programs, you can go to portal.hud.gov and access their Resources section or search for a specific kind of program with the Search bar.) PENALTY-FREE IRA WITHDRAWAL FOR FIRST-TIMERS First-time homebuyers are eligible to take $10,000 during their lifetime out of their Individual Retirement Accounts (IRAs) without paying the 10% penalty for early withdrawal. If yours is a traditional IRA, you will have to pay income tax on the money withdrawn. Roth IRA accounts are not subject to additional taxes as they are funded with money that has been taxed. Since the $10,000 lifetime amount earmarked for penalty-free withdrawal is for each individual, a couple could collectively withdraw $20,000 to pay for their first home. The money must be used within 120 days, though, or it becomes subject to the normal 10% penalty. OTHER HOMEOWNER TAX BREAKS s TheMortgage InterestDeduction. This is one of themost beneficial tax breaks that homebuyers can take advantage of, first-time buyer or otherwise. The IRS allows you to deduct from your taxable income the interest you pay to your lender. Home mortgage interest is one of the largest deductions for those who itemize. Lenders will report your mortgage interest on a 1098 form sent out annually. The Mortgage Interest Deduction is valid for loans up to $750,000. Homebuyers receive a large benefit in the first years after buying, as the first repayments have the highest interest. To claim the Mortgage Interest Deductionbenefit, a homebuyerwill have to file an itemized tax return. s Mortgage credit certification. The Mortgage Credit Certification is another programthat helps thousands of first-time homebuyers secure a tax break.This IRS programis aimed at helping lower-income groups afford their first home.TheMCCprogramis designed tooffset aportion of themortgage interest on a newmortgage tohelphomebuyers qualify for a loan. Because it is a tax credit and not a tax deduction, mortgage
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