Juicy Estates: Mortgage Blog

$8000 Tax Credit Can Not Be Used As Down Payment

On may 19th I posted about how the original mortgagee letter which allowed the $8,000 first time home buyer tax credit to be used towards the buyers down payment had been rescinded.  (read post here).

On Friday May 29th HUD released a new mortgagee letter regarding the same issue which will allow the $8,000 tax credit to be “monetized” and accessed through several different methods for the purchase of a new home.

However this mortgagee letter did not change is the fact that the $8,000 tax credit can not be used to meet FHA’s requiremnt that the buyer make a down payment equal to or greater than 3.5% of the purchase price from their own funds. In other words the $8,000 tax credit can be used “in addition to” but not instead of the 3.5% down payment. Remember the 3.5% down payment can be a gift from a relative.

The good news is that first time home buyers will be able to use the $8,000 tax credit to make a larger down payment, pay closing costs or buy down their interest rate to achieve a lower monthly payment.

Here are the relevant links:

HUD news release regarding mortgagee letter 2009-15

Mortgagee letter 2009-15

This entry was posted on Monday, June 1st, 2009 at 6:00 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. Inheritance Tax Guide UK said at June 1st, 2009 at 6:28 am

   More people in our country are beset with problems concerning the constant changes in inheritance tax laws.  Confusion as to what are really the rules and regulation with regards to inheritance tax

Leave a Reply

Name

Email (will not be published)

Website