The Iowa Finance Authority (IFA) today (Thursday), announced that eligible first-time Iowa home buyers may purchase a home and reduce their federal income tax liability by up to $2,000 a year for the life of their mortgage. Approximately 400 Iowa home buyers are expected to benefit from the program, which is now available for new purchases through a network of Take Credit Participating Lenders throughout the state.

IFA Executive Director Dave Jamison says “The Take Credit program will provide an additional incentive to first-time Iowa home buyers as we move into the spring home buying season. Hundreds of Iowa families will be able to both realize their dream of homeownership and benefit from a significant reduction in their federal income taxes.”

The program provides eligible home buyers with a tax credit against their federal income tax liability every year for the life of their mortgage. The amount of the tax credit for the 2015 program is set at 50 percent of the mortgage interest paid, up to a maximum of $2,000 per year, for up to 30 years. The remaining mortgage interest may be taken as a deduction from taxable income if the home buyer itemizes.

Eligibility for the Take Credit Program requires home buyers to meet household income and purchase price limitations and meet the definition of a first-time home buyer. The federal income limits vary by county, the limits currently range from $65,300 to $111,300 per year. A purchase price limit of $250,000 applies statewide with the exception of federally Targeted Areas where the limit is $305,000. A first-time home buyer is defined as someone who has not owned their primary residence in the past three years but also includes home buyers purchasing in a federally Targeted Area and military veterans who have not previously financed a home using a tax exempt bond program.

Jamison said  “Interested home buyers can apply for a mortgage credit certificate through a Take Credit Participating Lender as part of their financing process. Home buyers will need to have approval of the mortgage credit certificate before they close on a home so they should ask their lender about this opportunity early in the application process.”  The certificates are available on a first-come first-serve basis and the program will be closed for further reservations once available funding has been exhausted.

More information is available at IowaFinanceAuthority.gov/TakeCredit.