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First Time Home Buyer $8,000 Tax Credit to be Available for "additional" Down Payment

By
Mortgage and Lending with Guild Mortgage Co - Oak Harbor WA

I recently posted that Secretary of HUD, Shaun Donovan, had announced that FHA was going to allow the $8,000 Tax Credit to be used as down payment, or "monetized" and got a lot of flack from the "experts" in the field that it had been withdrawn and that there was no way this was going to happen. At the time, I knew that the announcement was premature, but knowing what I believed was going on behind the scenes, was pretty certain that this actually would come about.

Today, a new "Mortgagee Letter" from HUD was published that announces the same program and gives some of the guidelines. Granted, the ability to use the money is still a bit of planning away, but this proves that the program will be in existance and that HUD really does want to see people have acces to this money for their down payment. Now, spread the word. By the time your clients find their home, have everything in place to buy it, the program will have the kinks worked out.....at least I hope it will. Unfortunately, being the government doing the job on this, they seem to have made it very strange. It appears that the buyer will still have to come up with the 3.5% down and use the tax credit for closing costs or additonal down payment. Stand by for details as all of this works out>

About the author: Fred Chamberlin is a Senior Mortgage Consultant with Alpine Mortgage Planning, Eugene OR and the author of three blogs, Eugene Loan Guy, FHA Loans Oregon and No Money Down OR WA CA. He is also a contributing member of Positive Real Estate Professionals and My FHA Mortgage Blog.

Comments(8)

David Width Jr.
Little Egg Harbor, NJ

I don't know if you are referring to the "pre-fund program" where the buyer can actually borrow $5,000.00 of the tax credit up front and use it toward closings costs or not, but that is a great program also.

May 29, 2009 03:37 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Not the same David, but I hope it can actually work to help people.

May 29, 2009 03:50 AM
Irene Tron
Valparaiso, IN

Thanks for the update.  It seems it will eventually be a very helpful program for that first-time buyer.

May 29, 2009 03:56 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Irene, I think it will assist with those deals that getting the seller to pay closing costs make the value questionable and also getting additional down payment will get the borrower an approval, where the minimum won't. Anything that will assist sales, I am for at this point in time. We need to move the backlog of inventory.

May 29, 2009 04:29 AM
Anonymous
Danny Thornton

Fred, a good friend of mine sent the letter to me this morning. I am glad to hear that it is going to be available.

May 29, 2009 04:33 AM
#5
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Danny - I think this could be an interesting program. Still waiting for the shake out on how it is going to be done, but at least it appears to be in process.

May 29, 2009 06:42 AM
Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Fred, It will be interesting to see where this one goes!!

May 29, 2009 03:55 PM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Marchel - interesting could be the word. More likely, strange is the way it will turn out. I just love it when the government does things. LOL

May 31, 2009 10:14 AM