The ability to use the $8000 tax credit for a down payment was retracted by FHA and has now RETURNED but in a motified version.
You can still receive a big fat check after your purchase (if you are a first-time homebuyer) to use for upgrades, furniture, landscaping, paying off loans, and–best yet–putting more equity into your house (think of it as a retroactive down payment)!
Big Improvement to First-Time Buyer Tax Credit
Good News!
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration (FHA) is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.
Previously, most buyers wouldn’t receive the funds until after they filed their tax return, and that deterred some people from using the credit.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says.
He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
Source:
NAR & Daily Real Estate News | May 12, 2009
eco-modpod says:
FHA requires a minimum of 3.5% down payment. For a home loan of $150,000 that is $4,500 in cash, in addition to closing cost cash, that you would need to bring to the closing table. This is fantastic news for first-time homebuyers who have great credit and want to start building equity but haven’t had time to build their cash reserves to the level typically needed to purchase a home or just want to put the money into their home immediately.
Remember that the credit is good through DECEMBER 1 (not December 31). So, you’ll want to be under contract for a house by November 1 but realistically by October 15 at the latest (loans are taking longer to process right now).
Additional Resources:
Nuts and Bolts of $8000 First-time Homebuyer Tax Credit
FHA talks about the $8000 tax credit
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