About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
Filed under Government Mortgage Financing Programs News

The short version — this plan turned out to be a disappointment.

First time home buyers get an $8000 tax credit if they purchase a home this year. The hope was that the new plan would allow some or all of that $8000 to be used to cover the 3.5% downpayment requirement for FHA loans. The reality didn’t turn out that way. That will surely be a disappointment to many in the real estate business and many prospective homebuyers.

Here are some quotes from a recent WSJ article on the subject:

Under the guidelines, most borrowers won’t be able to use the funds from the tax credit to meet the minimum 3.5% down payment required for an FHA loan. Rather, they can apply the money toward closing costs, other upfront charges or increasing the size of their down payment above 3.5%.

“One of the primary hindrances for a lot of would-be buyers, especially if they’re entry-level buyers that are looking to be home owners, is coming up with a down payment. It doesn’t erase that,” Brent Anderson, vice president of investor relations for home builder Meritage Homes Corp. (MTH), said.

Anderson pointed out that closing costs can often be paid by the seller. “The down payment is a bigger assistance,” he said.

Comments (0) Posted by G.R.A. Admin on Saturday, May 30th, 2009

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