We just found out about an AMAZING program from our friend Emma Butler at Guaranteed Rate. It's called TaxSmart and if you qualify as either a first time home buyer or a buyer in one of Chicago's target areas it will literally save you thousands! Below is some info from the City of Chicago's Website where you can learn much, much more.
TaxSmart is a Mortgage Credit Certificate (MCC) program that provides a federal income tax credit to qualified homebuyers. A tax credit is a direct reduction of taxes due. Under the program, a home buyer would receive a MCC to reduce income taxes by an amount equal to 20 percent of the interest paid on a mortgage. The tax credit may be claimed each year the home buyer continues to live in a home financed under this program.
Federal law requires that a home buyer satisfy each of the following guidelines:
First-Time Homebuyer or Target Area Purchase
Any person who has not owned a principal residence at any time during the three years prior to closing a loan under this program is considered a first-time home buyer. Non first-time home buyers are also eligible if they purchase a home in a designated target area.
Federal law imposes maximum limits on the annual gross income of home buyers.
Federal law also imposes limits on the purchase price of homes financed under the program.
The home buyer must occupy the home as a principal residence within a reasonable period which, under most circumstances, may not exceed 60 days after financing is provided. A principal residence is a home occupied primarily for residential purposes and does not include a home used as an investment property, as a recreational home or a home in which 15 percent or more of its total area is used for a trade or business.
Each residence financed must contain 1-4 units. A one-family residence includes a detached home, one unit of a duplex, a townhouse or a condominium unit. If the residence is a 2-4 unit building, one unit of the residence must be the principal residence of the building owner and the residence must have been first occupied for residential purposes at least five years prior to applying for a mortgage loan financed in connection with the MCC.
The mortgage loan financed in connection with a credit certificate is required to be a new mortgage and may not replace a prior mortgage on the home (whether or not previously repaid).
In order to be eligible for a certificate, the home financed under the program must be located in the City of Chicago.
Mortgage credit certificates are issued to eligible home buyers on a first-come, first-served basis. The certificates are available in connection with any type of mortgage loan (except loans from tax-exempt bond programs), including fixed rate and adjustable rate mortgages.