Housing and Urban Development Secretary Donovan announced on May 29, 2009 to a meeting of homebuilders that the Federal Housing Administration will allow qualifying "first-time" homebuyers to use the previously announced $8,000 tax credit towards the purchase costs of a FHA insured home. So what does that mean to the qualifying "first-time" homebuyer?
The homebuyer can only access the $8,000 tax credit after filing their tax returns with the Internal Revenue Service. FHA guidelines require a homebuyer to make a minimum 3.5 percent down payment, so the end result is that the $8,000 tax credit can be used as additional down payment or for other closing costs. This could help the homebuyer get a lower interest rate.
As with all government programs, there are a great number of conditions and so it is critical for real estate professionals and their clients to understand the program and the process. A good jumping off point is to get more information on this HUD program by going to http://www.hud.gov/news/release.cfm?CONTENT=pr09-072.cfm Another resource for real estate professionals and their clients is the HUD Mortgagee Letter 2009-15 at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-15ml.doc which goes into greater program details.
As with all government efforts so far, this is not a silver bullet to cure all the ills of our housing market. It is, however, another step in correcting the failures of the past. As Secretary of Housing and Urban Development Donovan told the homebuilders, "What we are doing today will not only help families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."
