First-time homebuyers have to sign a purchase agreement by April 30, 2010 and close by June 30, 2010.
The income limit for claiming the full tax credit for single taxpayers is $125,000 and $225,000 for married taxpayers filing a joint return. The tax credit does not have to be repaid.
Homes purchased for up to $800,000 are eligible.
A first-time buyer is defined as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers this includes the home ownership history of both spouses.
Mortgage Modifications and Tax Credits
California Real Estate - Official Magazine of the California Association of Realtor -- March/April 2010
Although the home buyer tax credit seems to have given the market a jump start, many existing homeowners are still struggling under the weight of payments they can no longer afford, be it due to sudden rate increases, job losses, or other mounting debt. And due to negative equity, it's impossible to sell many homes without going for a short or distressed sale leaving many homeowners trapped.
Both state and federal government have launched numerous mortgage assistance and modification programs to help homeowners reduce payments on their loans, most recently including the Obama administration's Home Affordable Modification Program (HAMP). Under the HAMP, borrowers and lenders work out an agreement to reduce the monthly payment on the property for a trial period of three months.
But even though more than 728,000 homeowner have qualified for HAMP nationally, just slightly more than 30,000 of these homeowners have successfully adjusted their loans. Borrowers claim their proposals are getting lost in the maze of bank procedures, while banks claim that they need considerably more staff with expertise in loan modifications to properly handle the onslaught of homeowners who need help.
Dean Bake, co-director of the Center for Economic and Policy Research in Washington, D>C. says that the HAMP and other plans like it will not have much effect on the larger mortgage market.
"I think the various foreclosure moratoriums have just affected the timing of foreclosures," he says. "They have not reduced the flow. Only 15 percent of mortgages are even entering the process. Fewer will have permanent and successful modifications."