The Pennsylvania Housing Finance Agency has initiated the PHFA Tax Credit Advance Loan Program in a effort to better serve home buyers in Pennsylvania. PA home buyers who are using the Keystone Home Loan and the Keystone Home Loan Plus programs to purchase a home in PA can take advantage of the Federal First-time Homebuyer Tax Credit early by using the PHFA Tax Credit Advance Loan Program.
Why PHFA Established The Tax Credit Advance Loan Program
In order to qualify for the federal tax credit you must be a first time home buyer. Under the federal housing tax credit program, first time buyers are eligible for an $8,000 tax credit. However, the tax credit is paid to the home buyer with their tax return in 2010 if the home is purchased in 2009. In an effort to give home buyers advanced access to their housing tax credit the PFHA created the tax credit advance loan program.
Technically the PHFA tax credit advance loan program does not use the tax credit as collateral, but the loan program is setup to not require any payments or accrue any interest until June 2010. This time frame gives the first time buyer who is due to get their housing tax credit in 2010 enough time to get the tax credit refund and to then use that money to pay off the PHFA advance loan before payments and any interest is due.
PHFA Tax Credit Advance TCA Loan Program Guidelines
- The TCA Program is only available to first time buyers getting a PHFA first mortgage using the Keystone Home Loan and the Keystone Home Loan Plus home buyer assistance programs.
- The TCA can also be used through PHFA's special mortgage programs called the PHFA Access Modification Program and the Purchase Improvement Program.
- The TCA is a lien attached to the home which must be repaid before the homeowner can sell their property.
- The TCA can be for the lesser of 10% of the home's sales price or up to a max of $6000 for a new construction home and $5000 for a resale home. There is a minimum loan amount of $500.
- PA homebuyers planning on using the TCA must occupy the home they purchase.
- Until the end of June 2010 the TCA is interest free and has no payment. If the TCA is not paid in full by the end of June 2010, the TCA converts to a 10 year loan and an interest equal to the interest rate on the first mortgage.
- The TCA cannot be used in conjunction with other closing cost and downpayment assistance programs offered by the PHFA. These programs include: Keystone Assistance Loan, HOMEstead, or the Access Downpayment and Closing Cost Assistance Programs.
- There are no time extensions permitted to paying back the TCA that would extend the interest free period or the no payment grace period good through June 2010.
- The TCA cannot be used in non-arms length transactions such as buying a home from a parent or relative.
- Income and purchase price limits based on the federal tax credit income guidelines or the PHFA income and purchase price guidelines apply - whichever is more restrictive.
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