Using your $8,000 Tax Credit for your FHA Down Payment
San Mateo lender, Chris Williamson is contributing today’s lending tip. The government gave many first time buyers a gift this week and here’s the scoop…
Under the current Federal Stimulus Bill signed into law in February, Congress approved an $8,000 first time home buyer dollar for dollar tax credit. Until recently, this credit was not able to be used to assist with the buyer’s down payment. However, this week the Federal Housing Administration (FHA) announced a plan that will allow first time home buyers to get a bridge loan and use the $8,000 towards their down payment if they use an FHA insured government loan.
An FHA government insured loan has become more popular in the Bay Area because of its increased loan limits ($729,750 for a single family home) and low 3.5% down payment requirement. With the $8,000 bridge loan, which would come due when the home buyer received their tax refund next year, first time home buyers are required to put even less money down on a home. For example, a $400,000 purchase price requires $14,000 (or 3.5%) down payment with an FHA home loan. If you were to take advantage of the $8,000 bridge loan, you would only have to have a $6,000 down payment to become a home owner in 2009. This translates to a $62,800 gross annual income with today’s interest rates.
If you, a friend or family member would like to determine if this program is right for you, please contact me and we can examine your financial situation in more detail. If you want to find Chris, he’s with Mortgage California in San Mateo.
First time buyers shopping for a single family home or condo in the San Mateo-Foster City area have much to choose from today. We would be happy to talk with you about your wants and needs and help you make them a reality. Just click the “Contact Us” button on the left and send us your message.
This is great news, and I’m glad to see you sharing it with your readers. A lack of down payment is keeping a lot of buyers on the sidelines right now. This should encourage many of them to enter the market. Low rates, low prices, and tax credits … what’s not to love about all that? Take care. ~Brandon
GOOD NEWS/BAD NEWS
This announcement was great news. Unfortunately it was short lived. FHA backed out on May 14. I tried to get a Buyer qualified on May 15th and was turned down. FHA cannot be depended upon to accept the $8000 as a down payment. You can however get a “gift” from a relative or employer for the down payment and then pay them back by amending your 2008 tax return and receiving the $8000 within a couple of months or so. Remember, the $8000 incentive disappears December 1st 2009.
Craig Bruner Broker CRS GRI
I’ve been interested in taxations for longer then I care to admit, both on the individual side (all my working lifetime!!) and from a legal point of view since satisfying the bar and following tax law. I’ve rendered a lot of advice and redressed a lot of wrongs, and I must say that what you’ve put up makes perfect sense. Please continue the good work – the more people know the better they’ll be outfitted to handle with the tax man, and that’s what it’s all about.
It’s a noble idea that unfortunately went no where. There are no lenders that I am aware of that picked up on this idea of a bridge loan to allow for the credit’s use as a downpayment. And, that was very short sited on their part, in my opinion.
Thanks for posting this, It’s just what I was looking for on yahoo. I’d much rather hear opinions from an individual, rather than a corporate site, that’s why I like blogs so much. Thanks!