1st time home buyers credit as a down payment?
Ok. Ive read on numerous news websites that HUD is going to allow first time homebuyers to use the credit that they were going to recieve after purchasing a house as a downpayment instead..
but then i read on two diffrent websites that the idea has been recsinded and scrapped.
SO MY QUESTION IS, WHICH IS IT? Is this going to come into fruition or should i continue to keep saving every red cent i recieve???
- 1 decade agoFavorite Answer
A tough question in deed. I just bought my first house (about 2 weeks ago). I spoke with my CPA and he said that we could file our 2008 taxes and claim the credit - even before we closed on the house but that it wouldn't be entirely ethical, so, we didn't. We have since closed on the house and we need to amend our 2008 taxes in order for the government to recognize that we purchased the house and then they should send it.
My mortgage banker on the other hand swore up and down that we could get the credit before closing to apply it towards our downpayment, but I wouldn't trust her over my CPA.
In my opinion, you should absolutley be able to use that money towards the downpayment, but unfortuantely I don't think you can.
- teran_realtorLv 71 decade ago
CFP and Glenn are both right. You cannot get the money before closing - but some lenders are doing something where they "lend" you the money up-front to use for your closing, then after the IRS gives you the money, you must pay back the bridge loan.
It's a little like a "pay-day" loan or when a tax preparer gets you your money "immediately" - it's just a loan.
Still - do what your CPA says. Some tax advisers are allowing people to file with the IRS prior to closing, but that isn't legal.
- Anonymous1 decade ago
HUD did pull the mortgagee letter almost a fast as they put it up so as it stands right now it can not be done. I think they will bring back at some point but until then continue saving your money.Source(s): I'm a mortgage banker/broker
- glennLv 71 decade ago
your research is right. It is very frustrating.
I think FHA will end up allowing it to be used as a bridge loan that you will pay back plus interest when you get your tax credit. You may be able to use it for down payment and closing costs.
I bet it will get worked out very soon.