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Key Highlights of the American Recovery and Reinvestment Act of 2009

The following information is courtesy of Amy Karhoff with National City Mortgage:

On February 17th, 2009, President Obama signed into law the "American Recovery and Reinvestment Act of 2009."

The American Recovery and Reinvestment Act of 2009 (ARRA) had several targeted areas of focus and investment:

  • Clean, Efficient, American Energy
  • Transforming our Economy with Science and Technology
  • Modernizing Roads, Bridges, Transit and Waterways
  • Education for the 21st Century
  • Tax cuts to make work pay and create jobs
  • Lowering Healthcare Costs
  • Helping Workers hurt by the economy
  • Saving public sector jobs and protect vital services

Changes from this new legistlation that impact the housing industry most directly, include:

  • Increased tax credit benefit for first-time homebuyers in 2009 - The tax credit available to first-time homebuyers in 2009 is increased to a $8,000 maximum and does not need to be repaid as long as the property is not sold within 3 years.  This credit is retroactive to apply to any home purchased since January 1st, 2009 and is effective through the end of the year.  The $7,500 first-time homebuyer credit resulting from HERA 2008 is still applicable for purchases made between April 9th, 2008 and December 31st, 2008.
  • Home Energy Credit - Homeowners can recoup up to 30% of the cost of numerous projects, such as installing energy-efficient windows, doors, furnaces and air conditioners.
  • Funding of USDA Rural Housing Programs - The Rural Housing Service (RHS) direct housing loan program will receive $270 million and the unsubsidized guaranteed loan program will receive $320 million.
  • Reinstatement of higher Mortgage Loan Limits through the end of 2009 - The new limits will be effective through Dec 31st, 2009.  The limits will maintain the current floor limit of $271,050 for FHA and $417,000 for conventional.  The ceiling loan limit is increased to $729,750.  The factor for high cost areas is increased back to 125% of the 2008 area median home price for markets between the floor and ceiling limits.  For the few markets where 2009 limits were higher than 2008 limits, those markets will maintain the higher limit.
See the First Time Homebuyer Tax Credit Comparison Chart