A new mortgage tax credit that can reduce your federal income tax aims to get more first time buyers into homes.
A new offering from the South Dakota Housing Development Authority allows first time home buyers to take an income tax credit of up to $2,000 a year for the life of their home loan.
The tax credit is a dollar-for-dollar reduction of your federal tax liability, and is based on the amount of mortgage interest paid each year.
If applied, your employer can immediately start withholding up to $160 less per month from your paycheck, which some mortgage bankers say it a big help to first time home buyers.
"There's no repayment for this, strictly a benefit for [home buyers], and it can be used for
underwriting, so it may get more home buyers into homes," said Lori Lynass, Mortgage Banker at Black Hills Community Bank.
To qualify the purchase price of the property must be less than $204,432, and specific income requirements must be met.