HUD secretary: Tax credit can be used as a down payment
The $8,000 first-time home buyer tax credit keeps getting better. On May 11, the secretary of the U.S. Department of Housing and Urban Development, Shaun Donovan, announced to attendees of the National Association of REALTORS® Midyear conference that HUD will provide short-term bridge loans that will allow first-time home buyers to use the federal government's $8,000 tax credit as part of their down payment and closing costs.
The step essentially allows purchasers to get their $8,000 home-buying tax credit at closing rather than waiting until after filing their 2009 taxes. For many potential buyers, the fact that the tax credit couldn't be received until 2010 made it difficult to make a purchase before the Nov. 30 deadline - especially if they planned on using the tax credit as part of their down payment. Under this new program, the $8,000 can be used right at closing.
The short-term loan program would be available to buyers using FHA mortgages. It is expected the loans could be made by FHA-approved lenders, HUD-approved nonprofits, and state and local entities.
HUD officials say more details on the program will be published shortly. When that happens, more information will be available on www.Realtor.org.