Unlocking Government Mortgage Support: Claiming Your Money Back

There are several ways to claim money from the government towards your mortgage. The Federal Housing Administration (FHA) helps first-time homebuyers, seniors, and those buying manufactured homes by insuring loans, allowing lenders to offer lower down payments and closing costs. Additionally, mortgage credit certificates (MCCs) help first-time homebuyers and other qualified homeowners afford their mortgages by allowing them to claim a tax credit on a portion of their mortgage interest payments. Energy-efficient mortgages (EEMs) can also help eligible individuals buy or refinance homes designed to reduce energy use. Furthermore, the Homeowner Assistance Fund (HAF) has helped over 549,000 homeowners prevent mortgage delinquencies and defaults, with a focus on economically vulnerable and traditionally underserved groups. Finally, the Department of Veterans Affairs (VA) assists veterans, surviving spouses, and service members in obtaining home loans, refinancing mortgages, or financing home repairs. It's important to note that the federal government does not offer grants or free money for home purchases, and individuals should be cautious of scams claiming otherwise.

Help to Buy ISAs

You can make withdrawals from your Help to Buy ISA, but you won't get the government bonus on anything you take out. You can only get the bonus when you buy your property and need to hand over the deposit. Once your offer on a property has been accepted, you'll need to ask your conveyancer to apply for the bonus. The minimum bonus payment is £400, so you will need to save at least £1,600 to qualify for a government top-up.

It's important to note that Help to Buy ISAs are no longer open to new applicants. However, if you already have an account, you can continue to save into it and receive the government bonus until November 2029. The bonus can be claimed up to a year later. Additionally, the property price limit for the Help to Buy ISA is £250,000, or £450,000 in London, which may limit your options as house prices continue to rise.

Support for Mortgage Interest scheme

If you are a homeowner and receive certain income-related benefits, you may be able to get government support towards your mortgage interest payments. This support is called the Support for Mortgage Interest scheme, or SMI for short.

The SMI scheme is a loan that you will need to pay back with interest when you sell or transfer ownership of your home. It is not a lump sum, but instead, regular payments will be made directly to your lender to cover the interest on your mortgage and some home improvement loans. You can ask to stop receiving SMI loan payments at any time, and you may be able to transfer the loan if you are buying a new home.

To be eligible for the SMI scheme, you must be a homeowner and receive one of the following benefits: Universal Credit for three months (three assessment periods), Jobseeker's Allowance, Employment and Support Allowance, or Income Support for 39 weeks. If you are receiving Universal Credit, you can apply for SMI through your online account. If you are receiving a different benefit, you can apply by downloading and completing a claim form.

Once approved, eligible households receive a loan that pays a set interest rate on mortgages of up to £200,000 for working-age households and £100,000 for Pension Credit claimants. It is important to note that SMI interest rate payments are complex to calculate and are based on the amount of eligible loans and mortgages a claimant has, as well as the current standard rate for SMI.

Home Owners' Support Fund

If you are a homeowner in Scotland and are struggling to pay your mortgage or other loans secured against your property, you may be eligible for the Scottish Government's Home Owners' Support Fund. This fund is designed to help homeowners stay in their homes and avoid repossession. It consists of two schemes:

Mortgage to Rent

This scheme allows a social landlord, such as a housing association or local council, to buy your home. You can then continue to live there as a tenant, maintaining and insuring the property yourself.

Loan Stake

Under this scheme, the Scottish Government buys a stake in your property of up to 30%. This reduces your secured loan and gives you more time to pay it off. You will still own the home and be responsible for its maintenance and insurance.

To find out if you are eligible for the Home Owners' Support Fund and to apply, you must visit an approved money advisor. This could be your local Citizens Advice Bureau or your local authority debt advice service. They will be able to provide you with more information and guide you through the application process.

In addition to the Home Owners' Support Fund, there are other ways to get government support for your mortgage. For example, if you are a first-time buyer, you may be able to open a Help to Buy ISA (Individual Savings Account). This is a type of savings account that allows you to save for a mortgage deposit and claim a government bonus when you buy your first home. For every £200 you save, the government will pay a £50 bonus towards the purchase price of a property, up to a maximum bonus of £3,000. However, please note that Help to Buy ISAs are no longer open to new applicants, so you may need to explore other options if you are looking to open a new account.

US Homeowner Assistance Fund

The Homeowner Assistance Fund (HAF) is a federal program that was intended to help homeowners who were financially impacted by COVID-19. The program was established by the American Rescue Plan Act, which provided $9.961 billion to support homeowners facing financial hardship associated with the pandemic. The fund is distributed to states, U.S. territories, and Indian Tribes, and each state has developed its own program. The program's goal is to prevent mortgage issues, such as delinquencies, defaults, and foreclosures, as well as losses of utilities and home energy services, and displacement.

To be eligible for the HAF program, you must have experienced a financial hardship associated with the COVID-19 pandemic, and you must be applying for assistance for your primary residence. Additionally, your household income must be at or below your state's program requirements, with most state programs limiting eligibility to households with less than 150% of the median income in your area or $79,900, whichever is higher. It is important to check the specific state requirements, as some programs have established lower limits.

If you meet the eligibility criteria, you can apply for the HAF program in your area. The application process may vary depending on your location, but you can find your local program by visiting the Consumer Financial Protection Bureau website and selecting your state, district, or territory on the map. It is important to note that application submission does not guarantee you will receive financial assistance, as some locations may not have enough funds to help every applicant. If you are approved, the money will typically be sent directly to your mortgage servicer, utility company, or contractor making repairs, if they participate in the HAF program.

The HAF program is scheduled to end in September 2026 or when the funds have been used up, whichever comes first. As of June 2024, HAF-funded programs have assisted over 549,000 homeowners. If you have any questions about the program or your specific situation, you can contact a HUD-approved housing counseling agency for guidance.

Deducting mortgage-related expenses

In some countries, like the UK, the government offers support to first-time buyers through savings accounts like the Help to Buy ISA. This scheme allows first-time buyers to save for a mortgage deposit and claim a government bonus when they buy their first home. For every £200 saved, the government pays a £50 bonus towards the purchase price of a property. This means the government will give a 25% top-up on savings of up to £12,000, resulting in a maximum tax-free bonus of £3,000. However, it is important to note that Help to Buy ISAs are no longer open to new applicants.

In the US, the Internal Revenue Service (IRS) provides tools to help taxpayers determine if they can deduct amounts paid for mortgage interest, points, mortgage insurance premiums, and other mortgage-related expenses. This is done through an interview process that considers factors such as filing status, income, and the estimated total of mortgage-related expenses.

To deduct mortgage interest, US taxpayers can choose between the standard deduction and itemized deduction methods. The standard deduction offers a flat dollar amount that is consistent for most taxpayers, while itemized deduction allows for the selection of specific deductions, such as student loan interest, charitable contributions, and medical expenses. It is important to note that itemized deductions may require additional forms and supporting documentation.

When it comes to mortgage interest, it is classified as an itemized deduction and can be claimed using Schedule A (Form 1040). This form also includes other deductions like medical and dental expenses, taxes paid, and donations to charity. Additionally, if the home is used as a rental property or for business purposes, separate forms may be required, such as Schedule E for rental properties.

It is worth noting that not all mortgage-related expenses are tax-deductible. For example, homeowners insurance premiums, mortgage insurance premiums, and closing costs are generally not deductible. On the other hand, if you have a reverse mortgage, where the lender pays you while you continue to live in your home, the amount received is typically not taxable, and the interest accrued is considered interest on home equity debt.

Frequently asked questions