FHA to Allow First Time Buyers Credity Advance

The first-time homebuyer tax credit just keeps getting better.  The credit was increased to $8,000 this year and no longer has to be paid back. 

Now HUD has said that it will allow the credit to be advanced to FHA purchasers for use toward a downpayment via a bridge loan from lenders and nonprofit organizations.  Details are expected soon.    

The credit is 10% of the cost of a home, so a house costing a little as $80,000 is enough to qualify for the full credit.  The credit is refundable, which means that the government  pays you the difference if your tax liability is less than your credit. 

Because the credit is intended to encourage purchasers to stay for a while, it is recaptured if you sell the home or stop using it as your principal residence within three years of the date of purchase. 

Also, there is an income limit above which you won’t qualify.   

Ask your Realtor for detailed program rules and requirements.   

Don’t wait, the credit won’t be available after November 30, 2009.