LAS VEGAS - The Nevada Housing Division says it intends to offer up to $50 million in tax-free bonds to reduce interest expenses for first-time home buyers.
Investors who hold tax-exempt bonds may avoid income taxes on the interest, and, as a result, tax-free bonds usually pay lower interest than taxable bonds.
The interest savings are passed on to low-to-moderate income, first-time home buyers through the state program.
To qualify, a borrower must have income within limits that will be set later. Income limits will depend on the size of the borrower's family.
The division didn't offer tax-exempt financing last year, a spokesman said, because conventional mortgages were about as low as those that could be financed through tax-free bonds.
The state expects mortgage interest rates to increase this year, which would make the tax-free bond program advantageous for qualified home buyers.
The program has legal conditions that may discourage some people. If a home buyer's income or the value of the house rise very rapidly, the Internal Revenue Service may require the borrower to repay the subsidy. This rarely happens, the department said.
The housing division will be notifying mortgage lenders and asking for expressions of interest in the program. Countrywide Mortgage Co. is coordinating the Nevada housing bond program.
The State Board of Finance approved the bond allocation for single-family housing in December.
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