Congress has just enacted HR 3221, the Housing and Economic Recovery Act of 2008. This new law provides up to a $7,500 refundable tax credit/interest-free loan for first-time homebuyers.

My office has received many questions from Marylanders asking for the details of new law. This page offers basic information about how the tax credit works.

This page also contains links and resources for people who need help with their mortgages. Click here to jump to this section.

Who is eligible for the credit?

• Homebuyers who have not owned a principal residence at any time in the three-year period before the purchase.
• Individuals with adjusted gross incomes of $75,000 or less and couples filing joint returns with adjusted gross incomes of $150,000 or less are eligible for the full $7,500 credit.
• The credit phases out above those limits, and individuals above $95,000 and couples with incomes above $170,000 are not eligible for the credit.

What type of home is eligible for the tax credit?

Any single-family residence--free-standing house, duplex, condo, or coop--that will serve as the purchaser's principal residence. Second homes or vacation homes do not qualify.

How much is the credit?

• Ten percent (10%) of the purchase price of the residence, up to $7,500.
• For example, purchasers of a $50,000 home would receive a $5,000 credit. Purchasers of a $200,000 home would receive a $7,500 credit.

Why is it referred to as a "Tax Credit/Interest Free Loan?"

The tax credit must be repaid over a 15-year period. An equal portion of the credit (6.67%) will be added to your tax liability each year for fifteen years. If you sell your home before the end of the 15-year period, the remaining amount will be added to your tax liability for the year the home is sold.

How do I receive the credit?

When you file your income tax return, your tax liability for the year of the home's purchase is reduced by the amount of the credit.

You also have the option of claiming the credit for homes purchased until July 1, 2009 on your 2008 tax return.

When do I need to purchase a home to qualify for the tax credit?

Homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible for the tax credit.

If you have additional questions, please contact my State Office at (410)962-4436.

• Federal Housing Administration
  
  
• FHA Secure Loan Fact Sheet
  
  
• FHA Secure FAQs
  
  
• FHA - Information on Servicemembers Civil Relief Act (SCRA)
  
  
• HUD Approved Housing Counseling Agencies(SCRA)
  
  

• Maryland Department of Housing & Community Development
  
  
• Maryland HOPE (Home Owners Preserving Equity) - Provides access to counseling services and resources for homeowners needing to refinance.
  
  
• Homeownership Preservation Foundation - Nonprofit organization which creates partnerships with local governments, nonprofit organizations, borrowers, and lenders to help families overcome obstacles that could result in the loss of their homes. HUD Approved Credit Counselors can be contacted at 1-888-995-HOPE (1-888-995-4673).
  
  
• Prince George's County: Department of Housing and Community Development
  
  
• Baltimore Housing (Housing Authority of Baltimore City & Baltimore City Department of Housing and Community Development)
  
  
• Montgomery County: Department of Housing and Community Affairs
  
  
• Baltimore Homeownership Preservation Coalition