Home Builders Using Tax Credits to Woo First-time Home Buyers

Some home builders, are trying to grow sales in this slow market, hoping that a new law will bring buyers in their door. And many are adding incentives of their own.

Some builders are touting a $7,500 interest-free government loan for first-time home buyers that is contained in the recently signed Housing and Economic Recovery Act of 2008. Buyers have 15 years to repay Washington, and it covers purchases between April 9, 2008, and June 30, 2009.

And many hope to lure buyers, first-time or otherwise, with a controversial down-payment assistance program before it ends Oct. 1. This has come under fire because the buyer has no personal stake in the purchase when the down payment is provided by the seller and transferred through a charity.

Some companies, such as Lennar and Pulte Homes, are matching the $7,500 federal loan by lowering the price by that amount. Holiday Builders is offering the choice of a $7,500 discount or a 5.75% fixed-rate mortgage to qualified buyers.

Builders are making the changes known, meshing them with their advertising campaigns and telling customers at their model homes.

“For customers that want to take advantage of the down-payment assistance, that window is closing,” said Jay Mason, vice president of sales for Pulte Homes in Dallas-Fort Worth. The next few weekends will be important to home buyers seeking to close sales by the Oct. 1 deadline.

The new legislation covers a wide swath of the housing market, including changes to Freddie Mac and Fannie Mae, refinancing distressed borrowers into FHA loans and putting more homes within reach.

The day the law went into effect, the National Association of Home Builders put up a website explaining the changes.

Pulte’s Mason said he has heard from sales personnel that home buyers are reacting to the news of the $7,500 tax credit plus the lowered price.

Maybe now some that were thinking about buying a home will now have an extra push to get them off the fence.