FHA Unveils New Plan to Let Home Buyers Use $8,000 Tax Credit Upfront as a Downpayment

For those that qualify (there are certain criteria to be met including income limits) for the First Time Home Buyer $8,000.00 Tax Credit, a plan is finally evolving to let them use the credit where they need it most - for a down payment.  Although not all the details are worked out, such as how the "bridge loan" for the tax credit will be funded, the basic premise is there and promises to widen the availability of credit to the prospective homebuyers we all so badly need.

FHA Plans to Offer $8,000 Upfront to First-Time Buyers

by: Nick Timiraos

One of the problems during the housing boom was that many people were able to buy a home with little or no money down, giving them little financial incentive to work hard to hold on when times got rough.

Now U.S. housing officials are working on a plan that would essentially allow some first-time buyers to purchase homes by paying little money upfront. Rather, they would be able to put an $8,000 income tax credit for first-time buyers towards their down payment on loans backed by the Federal Housing Administration. The idea is to allow home buyers to “monetize” the tax credit. Right now, home buyers must wait until they file their taxes to receive the credit.

The FHA is finalizing a program that would allow approved lenders, non-profits, and state and local governments to fund short-term loans that could be used as down payments to be repaid once the borrower received the tax credit. Once they received their tax credit, they would pay off the short-term loan and put equity into their home.

New Plan Offers First-Time Home Buyers $8,000 Tax Credit Upfront - Developments - WSJ

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Tags: mortgage, FHA, tax credit, down payment, real estate, first time home buyer, NAR