Juicy Estates: Mortgage Blog

Can The $8,000 First Time Buyer Tax Credit Be Used as Downpayment?

Under a decision announced last week, the U.S. Department of Housing and Urban Development (HUD) will allow eligible first-time home buyers to use the tax credit authorized under The American Recovery and Reinvestment Act of 2009 during the actual home purchasing process.   However this Mortgagee Letter 2009-15 issued on May 11th appears to have been rescinded effective May 13th.  So in short, as it stands currently first time home buyers may not use the $8,000 tax credit as part of their down payment.  

If mortgagee letter 2009-15 is to be reinstated buyers and real estate professionals need to be aware that loan programs that would accommodate this development will not be available immediately.  There are many considerations that need to be addressed such as FHA and Conventional underwriting guidelines, secondary market saleability and pricing issues just to mention a few.

For now the down payment will need to come from the buyers own funds and/or as a gift from a family member when underwriting guidelines permit.

This entry was posted on Tuesday, May 19th, 2009 at 7:30 am and is filed under Home, Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Brandon said at May 19th, 2009 at 5:07 pm

   Great job keeping your readers up to speed on this. I really hope they open up on these guidelines. It will go a long way toward spurring the housing market, especially among the first-time buyers who lack down payment funds.

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