Note: This is something that has not yet happened, but may soon happen. I originally posted this information about the 8000 tax credit being used as a down payment on my main site, and thought it was relevant enough to share with everyone as to what may soon be around the corner. I once posted something about the then-pending 15,000 tax credit which passed into law as a 8,000 tax credit - so I have some experience as to how things change before they actually become official.
But I thought everyone would be interested to know what may be lurking in the near future.
Can you use the 8000 tax credit as a down payment for your home?
But that may change soon.
Yesterday, Secretary of Housing and Urban Development Shaun Donovan gave a prepared speech at the National Association of Realtors Real Estate Summit. He said something that was probably beyond interesting when he mentioned that FHA was currently working on a proposal that may involve people being able to use the 8000 tax credit as a down payment.
An excerpt from that speech regarding FHA's position on the 8000 tax credit being used as a down payment:
And we are taking action to further help the housing market recover. I'm excited to announce here at NAR that FHA's policy on the "monetization" of the first-time homebuyer tax credit will soon be published. I know that you've been waiting anxiously to hear FHA's position on the matter. We, like you, believe that this new tax credit is not only a tremendous opportunity for first-time homebuyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing. According to estimates by the National Association of Home Builders, this new tax credit will stimulate 160,000 home sales across the nation - 101,000 of which will be first time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first time buyer purchased their home.Enabling first time homebuyers to use the 8000 tax credit as a down payment would be a big win for the market - it would allow many more people to move into a home who currently may not have enough for a down payment.
We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.
We will be sure to keep you posted on developments in this situation as the happen.
(h/t Mark Madsen at MyFHAMortgageBlog for sharing the video about the 8000 tax credit being used as a down payment and the guys at ThinkBigWorkSmall)