8,000 Homebuyer Incentive Available In Advance in Lewisville, Tx

New parameters for the HUD $8K incentive may open the door for millions of first-time homebuyers.

The U.S. Department of Housing and Urban Development (HUD) announced Friday that its $8,000 incentive for first-time homebuyers has been tweaked from a refund at tax time to cash made available for assistance on down payments or closing costs.

The mechanics of the new program, according to National Association of Home Builders economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS. Homebuyers must still come up with the Federal Housing Administration's mandatory down payment of 3.5 percent on their own, but they can use the tax credit to lower their principal balance and save on monthly payments.

Families can only access this credit after filing their tax returns with the IRS. The announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.

"Families will now be able to apply their anticipated tax credit toward their home purchase right away," said HUD secretary Shaun Donovan. "What we're doing will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."

For more information, please visit www.HUD.gov/recovery and find out the facts about the American Recovery and Reinvestment Act of 2009