Thursday, June 11, 2009

Can the $8000 Tax Credit be Used for the Down Payment?

HUD has recently announced that the $8,000 income tax credit for first-time home buyers can be used to make an additional down payment (in addition to the mandatory 3.5% down payment) on FHA loans. However, NO lenders have instituted the program yet. Most probably won't. It makes very little sense from a business perspective to put processes in place for a program that expires in a few months.

The Colorado Housing and Finance Authority (CHFA) allows $6,000 of the $8,000 tax credit to be used as collateral for one of their programs (it's called CHFA JumpStart), but the CHFA rates are much higher than regular rates. Here is the link to see CHFA daily rates (CHFA rates are the same for every lender - there is no negotiation regarding rates):

http://www.chfainfo.com/lender/Single_family_lending_partners_and_realtors/Todays_rates.icm

Our recommendation is to ignore the HUD announcement about getting an advance on the $8,000 credit, simply because even though HUD allows it, it doesn't exist anywhere.

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