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Bay Area Affordable Homeownership Alliance

Bay Area Affordable Homeownership Alliance, Inc.

Owning, versus renting a home, can have significant positive tax benefits. The illustration provided takes into account these benefits. The primary tax benefits available to a home owner include being able to deduct the cost of interest, property taxes, and mortgage insurance (if any) that you will be paying on your house. Most first time homebuyers are in a combined federal and state tax bracket of 25%. This means that for every dollar you spend on deductible home ownership costs, that you will save twenty five cents in taxes. For example if your deductible costs for owning a home equal $2,000 per month, then you would save $500 that month on taxes. Eligible first time homebuyers may also be able to receive a tax credit for the interest you pay on your mortgage. Unlike a deductible expense, a tax credit is a dollar for dollar offset against your tax bill.  

If you are paying over $1,800 per month for rent, it can be cheaper for you to own a Below Market Rate (BMR) home in Driftwood.


The following is an illustration of the potential financial implications of owning a BMR home located in the Driftwood Development in Bay Point. This illustration should only be used for planning purposes and does not necessarily reflect the costs and financial implications directly associated with your ownership scenario. Factors, such as down payment, credit rating, subsidy programs applied, and interest rate could affect outcomes of your actual ownership costs.
















You can either get a refund from the amount you overpaid your taxes at the time you file your tax returns, or you can change your exemptions (Form W-4) with your employer to realize a higher net pay from each pay check.


The illustration below provides an estimate of how much it would cost to own a BMR in Driftwood with the following key parameters:

  • 3% down payment
  • 4.25% interest rate (only used for illustration purposes, your rate may be different)
  • $15,000 down payment assistance subsidy/grant
  • Using a mortgage credit certificate program

How much will it cost to buy a Driftwood BMR?




Based on this illustration, the monthly cost of ownership would be at $2,520, the projected monthly tax savings would be $682 per month, and the effective monthly housing cost would be at $1,838 per month. Accordingly, if you are paying close to this or more for monthly rent, then you should consider
purchasing a BMR in Driftwood.

In terms of cash requirement to purchase a Driftwood BMR home, you should have at least 3% for the down payment ($12,000) about 2% of the purchase price for closing costs ($8,000) and approximately $2,500 in reserves – a total of $22,500. Your cash can come from savings, eligible retirement accounts, or a gift from a family member.