First Time Home Buyer Tax Credit Can be Used For Down Payment on FHA Loans

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development announced today that the FHA is going to permit its lenders to allow home buyers to use the $8,000 first time home buyers tax credit as a down payment. Talk about getting buyers off of the fence! I know a lot of states had already figured out a loan system to allow this "advance" but for those that hadn't this seems like an even greater opportunity for first time home buyers using an FHA loan. The issues that I had heard from everyone was the fact that most everyone had to have 3.5% down for the FHA loans, so this seems to loosen that restriction. Shaun Donovan stated that the FHA approved lenderes will be allowed to "monetize" the tax credit through short-term bridge loans. The eligible first time home buyers will be able to access the funds immediately at the closing table.

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