First Time Homeowner Credit-Update!

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 The U.S. Housing and Urban Development announced that it will allow consumers that qualify to use the $8,000 first time homeowner credit towards the costs of closing on an FHA-insured home!

The credit originated with the American Recovery and Reinvestment Act of 2009 which offered homebuyers a tax credit of up to $8,000 for purchasing their first home.  Up until now, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent down payment on the purchase of their home and the only way to access the credit was through filing their income tax return with the IRS.  But, under the terms of the new rule, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate.

Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their down payments via secondary financing provided by the HFA or non-profit. In addition to the borrower’s own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the down payment.

It’s hoped that this new rule will help stimulate more home sales and thereby help stabilize the housing market.  It’s been estimated that this rule change would promote an additional 160,000 home sales.

This entry was posted on 5. June 2009 at 22:08 and is filed under Housing Information/Stats, Blogroll. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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