The first question that many people in Pennsylvania asked when the 8000 tax credit was passed was “can I use the 8000 tax credit for my closing costs?” and as of recently the answer is “yes”.

The Pennsylvania Housing Finance Agency has started a program that “loans” new home buyers the amount of the tax credit they will be due as long as they are using the Keystone Home Loan and the Keystone Home Loan Plus programs to purchase a home anywhere in Pennsylvania. These first time home buyers can now take advantage of monetizing the Home buyer Tax Credit early by using the PHFA Tax Credit Advance Loan Program.

The Pennsylvania Housing Finance Authority short term 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. It is expected that by accruing no interest and requiring no payments until this time will give the new home buyer enough time to claim their 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.

For people who are considering buying a home for the first time anywhere in Pennsylvania, chances are they have heard about the Federal tax credit for first time home buyers. We have compiled some of the most useful information here for answers to many of the questions that people have about the first time home buyer tax credit – and even found a helpful video.

More On The Federal Housing Tax Credit.

And for those who prefer to see answers in a video, here is a great one that answers quite a few questions:

Some of the top questions that we have heard from people are also below — if you have a different question after seeing all of these, let us know!

1. Who is eligible to claim the tax credit?
2. What is the definition of a first-time home buyer?
3. How is the amount of the tax credit determined?
4. Are there any income limits for claiming the tax credit?
5. What is “modified adjusted gross income”?
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
7. Can you give me an example of how the partial tax credit is determined?
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
9. How do I claim the tax credit? Do I need to complete a form or application?
10. What types of homes will qualify for the tax credit?
11. I read that the tax credit is “refundable.” What does that mean?
12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
16. I am not a U.S. citizen. Can I claim the tax credit?
17. Is a tax credit the same as a tax deduction?
18. I bought a home in 2008. Do I qualify for this credit?
19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
20. 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?
21. 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?

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