First-time homebuyers could be eligible for what is essentially an interest-free loan. The first-time homebuyer credit is available for purchases before July 1. The credit is equal to 10 percent of the home purchase price but can not exceed $7,500. The loan must be paid back to Uncle Sam at $500 per year, up to 15 years.
The home must be your primary residence, and it must be the first home a tax payer has purchased, although some can quality who have owned a home before but have not lived in their primary residence during the three years prior to the purchase.
Income limitations do apply. The tax deduction decreases for single tax filers whose modified adjusted gross income exceeds $75,000 annually. The tax deduction is not available for single filers with annual incomes exceeding $95,000. For married couples, it decreases with AGI above $150,000 and disappears completely for couples above $170,000.
The credit is not available if you buy your home from a close relative - like your spouse, parents, grandparents, child or grandchild.