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Georgia Dream NSP Program
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Georgia Dream NSP Program Certified Lender Partner with Georgia Department of Community Affairs Offering the $14,000 NSP (Neighborhood Stabilization Program) The Georgia Dream NSP Purchase Program was created to encourage
the purchase of foreclosed properties. Funds utilized are an allocation
of federal dollars received by the Department of Community Affairs
from the Housing & Economic Recovery Act of 2008. The program provides $14,000 to eligible borrowers
purchasing foreclosed properties in eligible areas.
Funds are disbursed in the form of a second mortgage
lien with no interest and no monthly payments. The lien
is released over a period of five years and six months.
Funds may be used for required repairs and/or down
payment assistance. This program begins April 1, 2009 and all funds must
be disbursed by June 30, 2010. How does the borrower apply? · All buyers must receive eight hours of in-person
home buyer education/counseling provided by a
HUD-approved housing counseling agency.
View HUD approved counseling agencies at
the link below: - Contact Metro Brokers Financial, Inc. a Georgia Dream participating lender
for pre-qualification and to begin the mortgage loan process. The lender
will evaluate your credit worthiness based on FHA or VA guidelines and
your qualifications for the program based on the Georgia Dream NSP
Down Payment Program guidelines.
Frequently Asked Questions: 1. May I take home buyer education online?
No. This program requires attendance at an 8 hr. HUD approved home
buyer seminar or face to face counseling. 2. Can I buy a home anywhere in Georgia?
No. You must purchase a foreclosed property in an area of greatest
need. Need was determined by the volume of foreclosed properties
in a county. Go to this link to view the map of eligible counties. Or view
the map at the bottom of this page 3. Are there income limits?
Yes. Eligible borrowers must have a total household income less than
120% of the area median income. Click here for the maximum income l
imit in each of the eligible counties. 4. Are only first time home buyers eligible for the Georgia
Dream NSP program?
Applicants do not have to be first-time home buyers and they are
not prohibited from owning other residential real estate. However,
the applicant must occupy the NSP financed property as his or her
primary residence within 60 days of closing. Any rental income
generated from the ownership of other residential real estate
would have to be counted as household income for NSP qualification
purposes. 5. If I am a first time home buyer and I use the Georgia Dream NSP
program do I still qualify for the federal first time home
buyer $8000 tax credit?
Yes. If you purchase a home prior to December 1, 2009. Consult
your income tax preparer or the IRS. www.irs.gov 6. I would like to use the $8000 federal tax credit as part of my
down payment. Can DCA include this amount in my mortgage loan?
No. DCA does not have a mechanism in place to monetize the
federal first time home buyer tax credit for use as a down payment. 7. Can I use other down payment funds in conjunction with this program?
No. Unlike the traditional Georgia Dream down payment programs, the
Georgia Dream NSP program cannot be combined with other down payment
assistance programs. 8. What interest rate will I pay on my first mortgage loan?
The first mortgage loan will be a 30 year fixed rate FHA or VA loan
originated by your lender within NSP guidelines. The rate will be
determined by current market rates and the lenders choice of
investor. Georgia Dream first mortgage interest rates apply only
when DCA funds the first mortgage loan. 9. Can I use the Georgia Dream NSP program to purchase a
short-sale or a home that is pending foreclosure?
No. the property must have been foreclosed and the title transferred
to the mortgage lien holder or an eligible agency. Eligible properties
must be owned by HUD, VA, USDA, Bank, Government Entity or an
eligible Non-profit. 10. Can the Georgia Dream NSP program be used to purchase a home
that was a foreclosure, but was already rehabbed by an investor
making the home move in ready?
Only if the investor used a local government’s NSP program to purchase
and rehabilitate the home. 11. Can I use the Georgia Dream NSP program if I am also using the
DCA Housing Choice Voucher Program?
Yes. However, you must use a Georgia Dream participating lender who
also participates in the HCV program. Foreclosed properties in need of
repair may not be eligible for purchase. When using the HCV program
the first mortgage must be a Georgia Dream first mortgage loan and
will be serviced by State Home Mortgage. Consult your Rental Assistance
Counselor or your participating lender for complete details. NSP Program Highlights: 1. $14,000 2nd Mtg. that is for purchase of a Primary Residence which
is a Detached, Attached, PUD, Townhouse or Condo.
Manufactured Homes are NOT ELIGIBLE. 2. $14,000 NSP can be used for Down Payment and rehabilitation
of an eligible property. NSP funds can NOT be used to pay closing
costs, discount points or pre-paids. 3. Property must have been foreclosed and now owned by Fannie Mae,
Freddie Mac, HUD, Va or an REO or Bank. 4. The Property must be VACANT. 5. The borrower must complete an 8 hr. face to face HUD approved
Homebuyer education class. 6. There are total household income limits that must be met. Even if
all income earners in the household ARE NOT on the loan, their
income is considered when calculating income for purposes of
meeting the income limits. 7. The property must be located in an approved area. See map attached. 8. The purchase price must be 15% below the current market value
of the home. 9. Form 72 must be signed and made a part of the Sales Contract.
See copy of form attached. Areas shaded in turquoise are eligible NSP SALES CONTRACT FORM 72 |
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$1,800 Georgia home buyer tax credit begins June 1, 2009
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June 1, 2009 marks the first day that the new $1,800 Georgia Home Buyers Tax Credit is available to buyers across the state! This legislation signifies another big push for real estate sales, and buyers need to take advantage of it while it lasts. The new tax credit is very different from the federally offered $8,000 First-time Homebuyers Tax Credit. It is only eligible for persons buying homes in the state of Georgia, and allows a credit of 1.2 percent of the purchase price of the home or $1,800, whichever is less. Here are the defining features of the new $1,800 Georgia Homebuyers Tax Credit: - Homebuyers are able to claim the credit on all purchases that occur AFTER June 1, but the home being purchased must have been originally listed for sale PRIOR to June 1.
- The credit ends on Nov. 30, 2009.
- Any homebuyer is eligible for the credit, not just first-time buyers.
- Eligible homes are single-family residences, including condominium units, that are occupied for residential purposes by a single family (must be primary residence).
- Home can be new, occupied or previously occupied. This includes foreclosed homes.
- Up to one-third of the tax credit can be received in a single tax year or the full amount of a taxpayer’s income liability for that year, whichever is less. Any excess or unused tax credit amount shall be carried forward to apply to the taxpayer’s succeeding years’ tax liability.
- The tax credit cannot be used against a prior year’s tax liability.
This is not in any way associated with the $8,000 Federal First-time Homebuyers Tax Credit.
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Who is eligible to claim the $8,000 tax credit?
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- Who is eligible to claim the $8,000 tax credit?
First time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.
- What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
- How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.
- What types of homes will qualify for the tax credit?
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
- Instead of buying a new home from a home builder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009and before December 1, 2009.
In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
- What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.
To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
- If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than 8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $75,000 and for married taxpayers filing joint returns with an AGI of more than $150,000.
- Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
- Does the credit amount differ based on tax filing status?
No. The credit is in general equal to $8,000 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $8,000 is claimed as a $4,000 credit on each of the two returns.
- Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $8,000 tax credit?
In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $8,000. For most first-time home buyers, this means the credit will equal $8,000. For home buyers purchasing a home priced less than $80,000, the credit will equal 10% of the purchase price.
- I heard that the tax credit is refundable. What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.
For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
- What is the difference between a tax credit and a tax deduction?
A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives a $8,000 tax credit would owe nothing to the IRS.
A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives a $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
- Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. Purchasers who utilize revenue bond financing can use the credit.
- I live in the District of Columbia. Can I claim both the DC first-time home buyer credit and this new credit?
No. You can claim only one.
- I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
- Does the credit have to be paid back to the government? If so, what are the payback provisions?
No repayment is required for purchases on or after January 1, 2009 and before December 1, 2009.
- If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
- For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
- Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the future home buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.
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