HUD Approves First Time Homebuyers, Lenders Using Tax Credit as Down Payment

Looks like I spoke too soon… HUD has approved first time home buyers and lenders (mortgagees) using the up-to-$8000 first time home buyer tax credit as a down payment, to pay closing costs and/or buy down the interest rate. The official HUD letter with guidelines was released yesterday. Here it is (if you can’t see the document, click here)…

HUD Letter to Mortgagees: Instructions on how to use First Time Home Buyer Tax Credit –

The next step is for banks/lenders to come up with a system internally that will allow them to offer this to borrowers. This could take a few days to a several weeks. Check with your lender to see if/when they have a system in place for you to take advantage of this program.

P.S. This “use your tax credit as a down payment” program is set to expire this November. The up-to-$8000 first time home buyer tax credit as a whole is set to expire December 1, 2009.

Hat tip to Dulles Association of Realtors (DAAR) for breaking the story.

What’s Up With the $8K Homebuyer Tax Credit Being “Monetized”?

On May13, HUD Secretary Shaun Donovan said that the Federal Housing Administration (FHA) is going to permit its lenders to allow first time home buyers to use the $8000 tax credit as a down payment (aka “monetize” the tax credit).

The next day, May 14, the Office of Management & Budget told the FHA to hold off on implementing the program because it was only a “proposal” (aka “sike!”).

Since then, consumers, agents, lenders and others have been waiting (impatiently) for a final and real answer to if/when the first time home buyer tax credit will be “monetized”.

Well, here’s the latest. According to an article in the Wall Street Journal,

“The FHA says that the rumors about the program’s demise were flat-out wrong and that the program will be rolled out soon. Some industry analysts say that the memo may have been pulled because the program, which uses a tax credit established in February’s stimulus package, needed an OK from the White House budget office.”

If the program is approved, it would only be available through November of this year so time is a ticking…

I’ll keep you posted as more becomes available.

(UPDATED) FHA to Allow $8K Tax Credit as Downpayment (RETRACTED)

UPDATED 5-14-09 I’ve have learned that the Office of Management & Budget has asked the FHA to (at least) hold off on implementing this program. The FHA’s bridge loan program is only a proposal at this time. I’ll keep you posted…

There is great news for first time home buyers… HUD Secretary Shaun Donovan said that the Federal Housing Administration (FHA) is going to permit its lenders to allow first time home buyers to use the $8,000 tax credit as a downpayment.

Donovan made the announcement today at the National Association of Realtors (NAR) Midyear Legislative conference in Washington, DC. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said.

According to Donovan, the 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 closing table.

Not sure what the cost of the bridge loan to home buyers will be. I have calls out to various lenders/loan officers now to see what I can dig up – I’ll keep you posted.