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In a previous blog I discussed the $8,000 Federal (new buyers) and $10,000 State (new construction) tax credits available to home buyers.  In an effort to further encourage home buying, the FHA has announced that it will allow home buyers to use the $8,000 Federal tax credit as part of the down payment at closing.

This would apply only to FHA loans.  Its good news for first time buyers anxious to get in the market but struggling with the down payment.  Now the buyer no longer needs to wait to file his or her tax return to get the credit, it can be applied to the down payment at closing.  Keeping in mind the FHA loans generally only require a 3.5% down payment--so this is great news and a large contribution toward that amount.

Although details are yet to be announced, it seems the federal tax credit will be applied to the down payment by utilizing a bridge loan.  We'll wait for details, but so far it sounds like a great gift for first time FHA buyers. 

As we discussed before, this little present is only available for homes that close by the December 1, 2009 deadline...so get shopping!

Questions or comments, email or call me.  Melinda johnsonlaw@sbcglobal.net or (714) 863-5485