HUD has announced that first time home buyers tax credit of $8,000 has been approved for all FHA loans.
But the catch this time is that you can’t use this tax credit for the required FHA down payment of 3.5%.
The new rules say you can receive the first time home buyers tax credit upfront, as a second loan from any Federal, State, or local agency, or any FHA approved non-profit organization.
What this all means is that you can borrow the money from the $8,000 Tax Credit as your down payment, but after you put down the first 3.5% of that down payment. You still need to come up with 3.5% of your own funds. With FHA loans, that can still be a gift from someone in your family, or it can also come from a non-profit or government agency but not from the tax credit . You can now borrow money against your tax credit in advance, to use for addidional down payment or closing costs. But you can’t receive any money back at closing.
Washington State has some Funds set aside in its latest budget to use for these loans but it has been difficult to find any information about it. I think they are still working out the details and have been waiting for this announcement from HUD to finalize them. I think we will be hearing more about this soon.