FHA’s Big Announcement for First Time Home Buyers
In an effort to make the federal first time home buyer $8,000 tax credit available to more Americans, The Federal Housing Administration (FHA) announced earlier this week they are planning to allow first time home buyers to use tax credit for down payments on FHA loans. Under the stimulus bill, first time home buyers could adjust their withholdings to recoup some of the tax credit money before filing their taxes in January, however, they were not able to use the money for their down payment.
So I Can Now Use the Tax Credit as Part of My Down Payment?
The new FHA plan is said to allow short-term bridge loans first time home buyers can use for down payments. The loans would be due when the home buyer receives their tax refunds. Once repaid, first time home buyers would pay off the short term loan and put more equity into their home.
Remind Me Again…What is FHA?
As you may recall, the FHA loan program is an increasingly popular loan in the Bay Area because of its low 3.5% down payment option. By allowing first time home buyers to use the $8,000 towards the down payment of their home, this substantially decreases the amount of money buyers must have to close a loan.
Let’s Look at an Example
For example, a $300,000 purchase price requires a $10,500 down payment (3.5% of the purchase price). With an $8,000 reduction in your down payment, you would only be required to pay $2,500 towards your down payment to close the loan today. To qualify for a $300,000 loan, you would need to make a minimum of $47,000 annually to qualify.
Stay Tuned for More Details
The details of this program have not been worked out as of yet, but will be released soon. Stay tuned for more information.
Want to Become a Homeowner in 2009?
If you or anyone you know would benefit from this program, please don’t hesitate to contact me. We can take a look at your personal financial situation in more detail and map out a plan to make you a home owner in 2009!
Other Posts You May Enjoy
- What Should I Bring to My First Appointment with My Mortgage Advisor?
- No Money to Put Into Home Repairs? No Problem!
- What Does the New Economic Stimulus Bill Mean to First Time Home Buyers?
- How Do Interest Rates Affect My Monthly Mortgage Payment?
- How Much Can I Afford with an FHA Loan?
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
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{ 4 comments… read them below or add one }
I’m looking to buy but my question is does this apply to my area such as solano county and marin county?
Yes. The federal tax credit is applicable across the United States. All counties in California are eligible.
I dont believe this is accurate. We looked at the updated memos from FHA and regardless of the tax credit, they still require a 3.5% down
Hi Connie, You are correct. At the time of this post, FHA was supposed to be working out a plan to put this into action. However, since then, no solid plans have surfaced and since the deadline for the first time home buyer tax credit is looming, it is safe to say it likely will not happen in time. Thanks for your input! – Chris