Using the $8,000 Tax Credit Toward the Down Payment on your Baton Rouge Home

When many people hear about the $8,000 first time homebuyers credit, they say "Great! Too bad I can't use it toward my down payment!"

Now you can under certain conditions!

Getting the down payment together is an issue for many people even if their numbers work out "perfectly" on a monthly basis. For buyers with another house or with savings, loving parents able to help, or 401k's to tap, this might not be an issue. For many, accumulating a lump sum is hard - even the 3 1/2% for FHA type loans. This is particularly true for lower income citizens who might lack the wider resources even to get help. The only way a potential borrower could see any actual money was by reducing the amount of his withholding.

When the credit was in the discussion stage, the National Association of Realtors (NAR) lobbied for it to be applicable to the down payment. Opponents pointed to a concern in the recent housing crisis: many people who lost their homes to foreclosure had little or no stake in their properties. Encouraging no money down or low money down purchases could lead to future doom. Down-payment assistance funds dried up.

That's why HUD Secretary Shaun Donovan announced a plan back in May that changed the rules for the tax credit to allow using it for the down payment. His good news was promptly clarified by subsequent HUD Mortgage Letter updates. The credit could be "monetized" or used toward a down payment after the buyer came up with the FHA minimum. Alternatively, a non-profit could help finance the down payment with a bridge loan.

Government agencies like state housing finance agency could offer longer term loans as second mortgage or could issue tax credit loans. Also, approved FHA lender can purchase the anticipated credit to apply to closing costs and any downpayment above 3.5%

If you looking to buy a home but need down payment help, one local resource is the Louisiana Housing Finance Agency in Baton Rouge. Sandy Ogburn Sandlinis committed to help you work though the details and even find more approved agencies who can help you take advantage of the new rules. Your Sandy's Team Realtor will help you find the perfect affordable home in Baton Rouge, Prairieville, or many other locations in East Baton Rouge, Ascension, or Livingston Parish. The credit currently is set to end December 1, so time is of the essence.