“Is a down payment on a house tax deductible?” is a common question asked by first-time home buyers. While it would be wonderful if the appropriate answer was “Yes,” it’s not to be. Buying a home does offer multiple tax deductions, but down payment dollars are not among them.
Mortgage Lender Rules
Depending on the specifications of mortgage programs, different downpayment percentages apply. Unfortunately, regardless of the mortgage program you want, real estate downpayments are not tax deductible. Some common mortgage lender downpayment minimums.
Downpayment minimums fluctuate based on the program you want. However, tax deductibility is not a feature of any of these loan types. While most lenders would not object to downpayment tax deductibility, the IRS and the government strenuously does object.
Yes, this is a big deal. You’d be much more willing to put down more of your hard earned cash as a house downpayment. Buying a home, however, still delivers you other tax deductions.
When you refinance your home, you typically don’t need a downpayment. However, you made need to add some cash if your equity amount is less than the required percentage of the home loan you want. You’ve probably guessed that this is similar to a downpayment. Therefore, the extra cash you bring to the table is equally not tax deductible.
Fortunately, all the aforementioned tax deductions still apply if you refinance the mortgage you used to purchase your home. You need not hesitate refinancing the first mortgage on your current home, since you’ll still enjoy the tax deductions for loan interest and real estate taxes, at a minimum.
First Time Homebuyers
First time homebuyers often experience the entire range of human emotions, from excitement and elation to frustration and/or depression. Focus on the excitement and elation; leave the frustration or depression behind.
Wherever you live, check with your state to see if they have some special mortgage programs just for first time homebuyers. Many lenders and state agencies offer more liberal mortgages for first timers. Don’t you feel special? You should, as lenders and state governments often try to offer help to first time homebuyers to navigate the confusing waters of home ownership.
You should still visit the HUD (Housing and Urban Development) website (to learn about FHA home loans), VA , Fannie Mae and Freddie Mac sites to learn more about home mortgages. You’ll be amazed at what you’ll learn.
We also have a lot more articles for first time home buyers on the LoanLove site, too. You will enjoy both fun and entertainment along with valuable mortgage knowledge that helps you make a more stress-free, budget-friendly home purchase.