Update 5/29: HUD reversed course today on its initial plan to allow homebuyers to use the $8000 credit towards a downpayment. Instead, the credit may be “purchased” by FHA approved lenders (and credited at closing), to pay for additional closing costs. While this decision may be helpful, it won’t have the impact originally hoped for, since buyers frequently negotiate to have sellers pay their closing costs anyway.
HUD announced that they are going to permit lenders to allow homebuyers to use their $8000 tax credit as part of their downpayment. This “monetization” of the tax credit is big news for first time buyers struggling to come up withe their 3.5% to 10% downpayments required in today’s lending environment. The current challenge to home buyers is that there is no way to ‘advance’ payment on the $8000 — buyers must wait until they file their 2009 tax returns in early 2010, creating a catch-22: buyers need the $8000 to buy a home, but can’t get to the $8000 until after they do so.
With this announcement, FHA-approved non-profit organizations will supply home buyers short-term or “bridge loans” up to the amount of the $8,000 first-time home buyer tax credit. Click here to learn about some of these programs, which provide funds for little or no interest.
Looking for info on the $8000 credit and eligibility? Read this post.
Remember, you must close on a house by November 30, 2009 to take advantage of the tax credit. Get started with your search:
Search the MLS
Attend a free first time home buyer class
See more buyer resources