You Cannot use $8000 First Time Buyer Credit for Down

HUD announced this week that last week’s announcement was null and void.  Reported here and most outlets regarding real estate, it was thought that qualified first time buyers would be able to use the $8000 credit as a part of their down payment.

Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers.

However, not everyone was in favor of using the tax credit as collateral on a down-payment loan.

“That tax credit should be savings, not debt,” said Patricia Garcia-Duarte, of Neighborhood Housing Services in Phoenix.

Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home’s seller to “gift” the down payment to a specific buyer through a non-profit organization.


We’ll have to wait and see what happens next.

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