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FTHSA

Premier Bank Iowa First-time Homebuyer Savings Account

Opening a Premier Bank First-time Homebuyer Savings Account (FTHSA) is a smart way to save for a first home. Our FTHSA is a state of Iowa tax-deductible savings account available to qualified residents of Iowa.

Frequently Asked Questions

The following FAQs provide general answers to common questions about FTHSA. Please refer to 2017 Iowa Acts Senate File 505 for definitive legal guidelines and instructions.

How does this law define a first-time homebuyer?
Iowa Senate File 505 defines a first time homebuyer as an individual who is a resident of Iowa and who does not own, either individually or jointly, a single-family or multi-family residence for a period of three years prior to the date on which the individual is named as a designated beneficiary of a first-time homebuyer savings account and the date of the qualified home purchase for which the eligible home costs are paid or reimbursed from a first-time homebuyer savings account.
Can I open a FTHSA even if I already own a home?
Yes, you may open a FTHSA even if you are a home owner provided it was established for the purpose of paying or reimbursing a designated beneficiary's eligible home costs in connection with a qualified home purchase. You may not be the account's designated beneficiary; you must designate an eligible beneficiary who qualifies as a first-time home buyer who must use the money for the purchase of a single-family residence in Iowa. The law includes penalties if the account is misused.
Can I open more than one FTHSA?
Yes. You may establish more than one account as long as each account has a different designated beneficiary.
Can I be the beneficiary of more than one FTHSA?
Yes. An individual may be both the account holder and the beneficiary of the same account and an individual can be the designated beneficiary of more than one account.
If I've already saved money toward a home purchase, why should I open a FTHSA?
While a regular savings or checking account may pay similar interest, only an account officially designated as a FTHSA allows you to deduct your contributions on your Iowa income tax return.
I already have a savings account at Premier Bank, do I need to do something different?
If you want to take advantage of the benefits of a FTHSA, we recommend you keep funds you are saving for a home purchase in a separate account. You do not need to close your existing savings account but opening a FTHSA simplifies your record keeping, lowers the chance of accidentally using the funds for a unqualified purpose and helps us ensure you get up-to-date information about this specialized account. This is an easy process and once we set you up, you can easily view and manage your FTHSA along with all your other accounts via online banking.
How is this different than other first-time homebuyer programs?
A FTHSA is a deposit account created for the purpose of saving for a down payment. A variety of first-time homebuyer assistance programs exist for the purpose of obtaining or closing the mortgage such as grants that help with down payment or closing costs. It is possible a FTHSA beneficiary may also qualify for additional homebuyer assistance programs when ready to make a purchase. Your Premier Bank mortgage lender will explain available programs and guide you through the process.
What type of home can I buy?
The law stipulates that the funds must be used for a qualified home purchase, defined as a single-family residence in Iowa. The law further indicates single-family residence means a single family residence owned and occupied by a designated beneficiary as the designated beneficiary's principal residence, including but not limited to a manufactured home, mobile home, condominium unit, or cooperative.
What if I withdraw money from my FTHSA for something other than a qualified home purchase expense?
According to the Iowa Department of Revenue, any amount withdrawn from a FTHSA for a non-qualifying purpose during the tax year must be added to the account holder's Iowa net income for that year, to the extent the amount was previously deducted as a contribution. Any withdrawal that must be added to the account holder's net income is subject to a 10% penalty, unless the withdrawal was made due to the death of the account holder or due to a garnishment, levy, or other order. In calculating Iowa taxable income, a taxpayer must add back any amounts deducted at the federal level and paid or reimbursed for qualifying purposes from funds in a FTHSA.
How long can I deduct my contributions?
The deduction for contributions is subject to a lifetime limit of ten times the account holder's annual deduction limit. This would be reached in ten years if full allowable contributions were made yearly. We encourage you to seek the guidance of a tax or legal professional to ensure that you receive the full tax benefits available to FTHSA account holders.
When can a beneficiary use the funds?
Funds in an FTHSA may be withdrawn at any time. However, to avoid penalties to the account holder, withdrawals must be used by the first-time homebuyer named as the beneficiary to purchase a single family residence in Iowa. This purchase must be made ninety days or more after the date the account holder first opens the FTHSA.
 

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