Can You Take the First-Time Home Buyer Credit if Your Co-borrower Is Ineligible for It?

Dear Jennifer,

You are eligible for the maximum credit if your house costs more than $80,000 and your modified adjusted gross income (MAGI) is $75,000 a year or less. However, you might want to rethink your plans a bit. The IRS allows you to claim the $8,000 credit even if your fiance can't. The key is that he is your fiance and not your husband--married couples can take the credit only if BOTH are first-time home buyers.

You have a timing issue, because if you are married when you close on your new home, you are not eligible to claim the credit. If I were you I would either speed up my escrow or get married later. That $8,000 could go a long way toward paying for a wedding or furnishing your new home.

The other consideration is your mortgage interest rate--today's rates are as low as they go, but an impending economic recovery could send them up very quickly. Mortgage interest rates almost always move up a lot faster than they move down, and right now there isn't a whole lot of room for improvement. I would move up my closing date and lock in today's low home loan rates as soon as possible.

Good luck (and congratulations to you both),

Liz

About the Author:
Liz Freeman has more than a decade of mortgage lending experience. In addition to this, she has worked as a tax accountant for Deloitte and a systems consultant for Experian. Liz earned her BS in Financial Management from the University of Nevada. She writes about mortgage and finance issues and is a regular contributor to Mortgage News Daily and other publications.