$8,000 tax credit as a down payment? Sort of…read the fine print

We just wanted to post on this real quick to clarify the recent news of the $8,000 tax credit as a down payment. tax_creditHUD released this pre-maturely a few weeks back before realizing it broke their own rules, they revised / re-worded it and re-released it and now it’s official, you can use the $8,000 tax credit towards a down payment, closing costs or rate buy down. HOWEVER (notice, that’s a big however), whatever down payment is required for your particular loan program must come from your own funds not the $8,000 credit. In other words if you’re using FHA you still need to come up with the 3.5% down on your own, the tax credit cannot be used for that, but you can say put 7% down instead and that extra 3.5% can come from the tax credit.

The mechanisms to accomodate this are still being put in place, our understanding is it could still be a few weeks, maybe even months before it’s widely available to be used. The way it will be used as a down payment essentially equates to a bridge loan. You get up to $8,000 loan, use it towards closing, down payment or rate buy down, go through escrow and complete the home purchase then pay off that short term loan with the tax credit funds.

Of course if you have any detail questions on this please don’t hesitate to contact us anytime or you can also contact one of the lenders we refer clients to on the “Meet Our Team“ page on our main site.

Scott McDonald, Your Oregon Real Estate Agent!

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