Tax Credit toward purchase of FHA Home

From the FHA Press Release:

"Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home.

Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate.

Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit.

In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment.

Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away.

Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit."

Jim Starwalt

Thinking of making a move? Log onto my website at www.StarHomeFinders.com and search the Multiple Listing Service from over 150,000 homes for sale. Registering is quick and easy!

Jim Starwalt, Broker Associate RE/MAX Center, Phone: 847-548-2625 Jim@StarHomeFinders.com