As Down Payment...

Gina,

This was not meant to be used as a down payment. It has just recently being able to be used for closing cost or to buy your rate down. But never was it able to be used as part of your down payment.

A buyer can have gift money from a family member for a down payment with a FHA loan.

According to the Realtor (with the actual Realtor logo and trademark) Magazine, this was written on May 12, 2009...

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is working on a plan that will permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

"We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment," Donovan says. His remarks came in an address to several thousand REALTORS® gathered May 12 at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA's approved lenders would be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table. The plan isn't final; more details are expected in coming weeks

Then, within the same Realtor.org magazine, on May 29, 2009, they made it available according to the terms you are referring to--closing costs, etc.. But, they also admit that it will be nearly impossible to utilize in this way, because of the following...

Although the HUD guidance allows the bridge loans to be used in conjunction with FHA first mortgage financing, few lenders are expected to create bridge-loan products. There are a number of reasons for this. First, the loans must be structured as personal loans rather than as second mortgages or mortgage-backed lines of credit because of statutory restrictions. Second, the limited time-frame of the tax credit program--it's set to expire before Dec. 1 of this year--leaves little time for lenders to set up and operate programs profitably.

I just wish they wouldn't announce incentives to the masses that create hope. knowing it's more than likely going to let them down.

As the time keeps ticking until this program will no longer be available they seem to be still working it out.

I would like to see the first time buyers be able to use this money. It would bring a lot more people to the purchasing table. However I think they want the home buyer to have something invested in the deal.

Working toward making my first post.

First time home buyers should be able to use this money and they need to be invested as well. The $8000 first time buyer tax credit should be to help those that are able to buyer a home without the credit and the credit should be to secure their investment in a time of unstable home values. If the monies are made too widely available we could very well be adding fuel to the mess that created the need for the credit in the first place.

Well the way the credit was working in the beginning was that the buyer would get the credit when they filed their taxes in April. So as far as helping at all in purchasing a home it was not going to be able to be used that way. It could have been used to buy something for the home.

By letting the buyer use the tax credit to buy their interest rate down this would work well in the long run for the price it would cost to own the home. The way the credit being used up front works. Is the buyer must have their down payment. It can only be used for closing cost or to buy the rate down.