FHA Lenders to Allow $8000.00 to be used for Down Payment, UPDATED

Real Estate Broker/Owner with Missy Caulk TEAM

FreedomHUD Secretary, Shaun Donovan announced yesterday that FHA Lenders are going to allowed to let First Time Homebuyers use the up to $8000.00 tax credit as a down-payment.

To quote Mr. Donovan, speaking at the Mid-year conference of NAR in Washington:

Secretary Donovan said that important changes, which the National Association of Realtors® has been calling for, will help consumers purchase a home. “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 downpayment,” Donovan said. According to Donovan, the 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.

It will be interesting to see what the rate is on the bridge loans, but regardless this is a great step in the right direction. I appreciate NAR spear-heading the effort for home-buyers.

Read more information on the Realtor.org site

Ann Arbor, Saline, Dexter, Chelsea, Ypsilanti, Milan buyers this is exciting news for you. This has been one of the most consumer asked question on my Ann Arbor Real Estate Blog.

Begin your homes for sale in Washtenaw County here.


HUD has pulled the letter, Read Jeff Belongers post here.



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Missy Caulk, Ann Arbor Realtor

Missy Caulk, Broker/Owner of Savvy Realty Group can be reached at 734-926-9797 or email: Missy@MissyCaulk.com

Our Team of 6 agents are available to help you relocate to Ann Arbor, Saline, Dexter, Chelsea, Milan, Ypsilanti Township, Clinton, Manchester, Whitmore Lake, or throughout Washtenaw County, MI.

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Re-Blogged 1 time:

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  1. Karen Hurst 05/13/2009 07:31 AM
Real Estate General Information
Michigan Washtenaw County Ann Arbor
Posts to Localism
Keller Williams- Michigan
Local Expert
8000 tax incentive to be used for downpayments

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Michael Barrow
Keller Williams Realty - San Diego Metro - San Diego, CA
Realtor, San Diego CA Real Estate

According to an internal email from one of my lenders:

You may have noticed that the Mortgagee Letter 2009-15 has been removed from the HUD website.   While we are not sure why the letter was removed, we believe you should proceed cautiously until the letter is re-posted.

May 14, 2009 01:12 AM #103
Clint Miller
Real Estate Pipeline, Inc. - Missoula, MT

RE-itterating what Michael just said....this program is now dead. Or, at least that is what I hear from sources at Midyear.  Although it MIGHT still happen...the letter was removed from the website and the program, in its initial form, is not available.

May 14, 2009 01:15 AM #104
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

Has anybody seen this?


It looks like they are the first to start this program, and the article says it has been approved by HUD. Also, there is a $500 service fee attached to the loan. It will be interesting to see if this plays out as advertised.

Anybody in Memphis on here who knows of this and can comment?

May 14, 2009 01:49 AM #105
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

I had posted this link on my blog for the HUD Mortgagee Letter 2009-15, and it still seems to work as a download, not sure why:


May 14, 2009 02:00 AM #106
Scott Baker
www.eHomeReports.com Coldwell Banker West Shell - Liberty Township, OH
Realtor Homes for Sale in Cincinnati, West Chester, Mason, OH Area

I believe approving loans to buyer's that didn't deserve a loan is more to the point of what caused the foreclosures. I may be naive, but I believe that a consumer that is concerned about their credit, that pay his bills on time, therefore has a good credit score, when that consumer buys a home. They will not allow themselves to take on more (monthly PITI) than they can handle, WITH CUSHION. I'm not saying there are not exceptions, but in general, I believe those with good credit still have their good credit and their home. 

May 14, 2009 02:08 AM #107
Mary Ann Roney

I think it is great for the 1st time buyer. I haven't seen it at the closing table yet. I wish they would extend it to all home buyers. I know that would help us here in Michigan.

May 14, 2009 02:48 AM #108
Michael Loeb
TGC Financial - Port St Lucie, FL

Running some fast numbers.

$8000 equates to 5% on a $160,000 house, and 3.5% of $228K.   Plus if you can get the seller or REO bank to pick up the closing costs you can have a FTHB get into a house with no money down.

Great...  another 100% financing arrangement... they've worked so well in the past.

(can you see my eye's rolling around in my head?)  

Please.. no comments about me being a "glass half empty" type of person, I don't believe in problems being solved by doing more of the same things that got you into the problem in the first place.




May 14, 2009 03:15 AM #109
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

The letter has been taken down on the web site and VAR website has said they have retracted or put this on hold.

Should never have been sent out my NAR or MAR.

May 14, 2009 03:41 AM #110
Tony Felbab

I hate to tell you this but my GMAC rep said HUD withdrew this    

May 14, 2009 04:23 AM #111
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

And now I just saw this on Realtor.org web site:

Many States Already Monetizing Tax Credit

If this program has been withdrawn, how are these states implementing this, and what other states besides Washington are involved? The article says there are 10 states but doesn't list them.

May 14, 2009 05:12 AM #112
Teresa Flora
Hood-Flora Realty - Lawrenceburg, TN

First it wasn't the 100% loans that sent us down the road we are on. I believe it was how buyers where being qualified with teaser interest rates then rates ballooning out. Then once ballooned the buyer having a hard time with the payment and in most cases giving it a great try but loosing the battle in the end (foreclosure)..

Anyway back to the point. Many people don't have or can't get to savings. However,  that doesn't mean they can't afford a mortgage, taxes and insurance payment. So with this news it would have or could have helped a lot of people. And as far as helping, it would have helped more then just the buyer....

I really hope this or a program like this is put into place and soon...


May 14, 2009 05:21 AM #113
Jerry Gray
Wilkinson ERA Real Estate - Winston-Salem, NC
Serving the Triad Since 1980

Hi Missy,

Thank you for your post. I will use this with my buyers.


Jerry Gray CRB,CRS / Prudential Carolinas Realty / Winston Salem, NC



May 14, 2009 07:09 AM #114
Teri Eckholm
Boardman Realty - White Bear Lake, MN
REALTOR Serving Mpls/St Paul North & East Metro

Missy--I didn't read this yesterday but was at a continuing ed class today and this was being discussed. Good for you for putting the corrected information out as soon as you heard...Lots of misinformed people out there based on what was said yesterday.

May 14, 2009 08:29 AM #115
Sandra Scott
DPR Realty - Payson, AZ
REALTOR of Choice! Payson, Pine & Strawberry, AZ

I suppose we have all heard by now that it was all a part of "push-pull" that is developing in this crazy $8,000 tax credit business.  Too bad we aren't going to get to use it as a down payment after all.  That darned Mortagee Letter 2009-15 was withdrawn.  I'm going fishing!

May 14, 2009 09:02 AM #116
Roland Carrillo, PhD - Mortgage Consultant
Cary, NC

By the time they get this sorted out, the December 1st expiration of the tax credit will have passed.  It is withdrawn and with the backlash on 100% financing and "seller funded DPA", I doubt this plan will pass.

It can be done right... just look at USDA and VA that are 100%.  But it needs to be carefully weighed with attention to credit, income and reserves.

May 14, 2009 03:37 PM #117
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I've been thinking that something like this would make a lot of sense.  Hopefully it will be helpful for many first time buyers.

May 14, 2009 04:45 PM #118
Dana Wilkinson
Connect Realty, The Woodlands, TX - The Woodlands, TX
Broker-Your TX agent for The Woodlands-Spring-Conr

Since so many of the predatory lenders have gone belly-up, and the rules have been severely tightened on the balance, I don't know why this plan could not work if the buyer was fully and carefully underwritten.  A world of people have good credit, but not much cash.  It still costs a lot to move and set up a house, so they would have to have something put away for that closing day.

May 15, 2009 01:30 AM #119
Anja Kerstens
Coldwell Banker Residential Brokerage - Morgan Hill, CA
GRI, CDPE, CHS, ASP, Selling Silicon Valley Real

That's good news.  I missed that announcement since I was on vacation.  I am flying home as I write this.  Too bad I am not a first time homebuyer.  I could use it right now.  My husband relocated to a new city for a job and we are trying to find him a little crash place. Won't it be nice if there was some benefit for us too?  Like the investor who benefits with incentives, why not those who can afford a second home?

May 16, 2009 07:16 PM #120
Lou Burton
Consumer Source - South Florida, FL

Thus far there are no changes from Secreatry Donovan's comments at the Real Estate Summit as per Miami HUD Public Affairs.



May 18, 2009 07:22 AM #121
Mark Velasco
Sharpstone Realty, Inc - Whittier, CA
Listing Agent-Whittier & Surrounding ciities

Missy, thank you for sharing this valuable piece of information.

May 18, 2009 01:54 PM #122
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