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First Time Buyer $8000 Tax Credit Can Go Toward Downpayment

FHA issues guidelines allowing consumers to use $8,000 tax credit toward downpayment

U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan announced that the FHA would permit the federal $8,000 first-time homebuyer tax credit to be used toward a purchaser’s downpayment.

This week, the FHA finalized the rules that allow state housing finance agencies and some non-profits to monetize the credit, officially making the credit available to be used toward a downpayment.

According to HUD, the new rules allow FHA-approved lenders to “monetize” the tax credit for use as part of a downpayment or for closing costs, which can help achieve a lower interest rate. Borrowers can immediately apply the funds toward their down payments in excess of the required 3.5 percent.

Previously, borrowers applying for an FHA-insured mortgage were required to make the minimum downpayment and lenders could not monetize the tax credit for use as an additional downpayment.

To read the entire HUD press release and Mortgagee Letter 2009-15, click here.

1 comment:

  1. Thanks for the helpful information

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