According to Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a down payment on a new home. “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 said. FHA’s approved lenders will be allowed to “monetize” the tax credit which in turn will allow eligible home buyers to access the funds immediately at the closing table vs. waiting for the credit on their 2009 tax returns.
Anyone looking to take advantage of Tax credit but was unable to come come up with the down payment can now get in the game. So what are you waiting for? For more information read here.
UPDATE: May 18:
It looks like it may not be etched in stone just yet. The Boston Globe reported on Thursday that the letter was rescinded by HUD and.or FHA. More news to come..
UPDATE May 29:
Its official HUD announced on Friday that first time home buyers can use the credit as a down payment. According to NAHB economist Robert Dietz, lenders purchase tax credits from the buyers and then collect the rebate from the IRS. This appears to be a better option than the bridge loans offered by some states prior to this announcement by the feds.