Clarification on 8k Tax Credit

I have been getting tons of calls and emails regarding the $8000 Tax Credit towards down payment & closing. To clarify, only non-profits, government agencies (Federal, State & local) approved by FHA/HUD can offer the $8000 as a second lien for the buyer. The $8000 can NOT be utilized towards the 3.5% down payment. The $8000 can be used towards any additional down payment or closing costs. Enclosed is the HUD mortgagee letter guides Using First Time Homebuyer Tax Credit.

Example: Purchase price $250k, down payment 3.5% $8750 – the $8750 MUST come from the buyer(s) OWN funds. The $8000 tax credit can be utilized to cover closing & pre-paids and any additional down payment.

Non-profits and other government agencies that are offering this will have their own guidelines as well. The IRS has additional restrictions on income. Per IRS guides: The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

Thomas Merical