After having written about an update on the federal tax credits for home buyers just two days ago, we had this new tidbit of news that came out today that will definitely fill your cup if you’re in the market to buy a home in California.

As part of his State of the State address, Governor Schwarzenegger announced today his 2010 proposals for California. One of the proposals is a recommendation to set aside $200 million for a new round of $10,000 state tax credits for first-time home buyers. The new proposal expands upon the initial $10,000 state tax credit by including both new and existing homes. Last year’s tax credit applied only to new homes so this opens up to a lot of buyers in the established neighborhoods of San Diego. 

At this point, this is not in legislation yet, but I will certainly update with any new changes as this is great news for both home buyers and sellers.  This would help keep property sales moving at a steady pace through 2010.

The tax credit could be combined with the recently extended and expanded federal tax credit for grand slam for home buyers.

Hypothetically Speaking

If this proposal passes, then let’s look at how phenomenal this could be for San Diego Home buyers.

Let’s take a young couple wanting to buy their first home for $400k. They qualify for an FHA loan with 3.5% down so they need to come in with $14,000 for a down payment. Their closing costs come to approximately $8,000 total, but in their offer, the seller agreed to credit $4000 to cover the buyer’s closing costs. So you have a total of $22,000 in costs including down payment and closing costs, but you have $4000 credit so you are left with $18,000 total costs to buyer.

The buyer receives the credit for $18,000 so essentially they are getting 100% financing.

Opportunity is knocking my friends…are you listening?