Tax credit can now be used for downpayment

This is great news and it is something I have personally been campaigning for since late 2008. You see, the biggest challenge for most home buyers is coming up with the cash needed to make a downpayment. The monthly payment is not usually the challenge, as that payment is similar to a rent payment for a comparable property. With this in mind, the Federal Housing Administration made a big decision and an announcement yesterday that will give first time home buyers some real help.

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration (FHA) is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment. In a sense, the “no money down” days are back, except this time the home buyer will have equity in the property. Details about the tax credit can be viewed on the March 10, 2009 post or go to http://www.wisconsinhomebuyer.org/taxcredit.html

Tax Credit Can Be Used For Down Payment

The fact that FHA will allow this will make home ownership possible for a large number of first time buyers who just weren’t able to raise the funds necessary to buy. Believe it or not, this will help the entire market, not just the lower end of the market. Anything that helps remove the glut of homes on the market will be good for all home owners, including the move up market and higher end homes. The key to seeing home appreciation again in SE-WI is to reduce inventory to 6 months of supply or below from the current 11 months.

How To Use The Tax Credit As A Down Payment To Buy A House

Donovan, speaking at a Real Estate Summit, said “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.” In order to facilitate this, 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 time of purchase. For more information call our lender Netcentral Mortgage at 414-258-7833.