FHA Allows Borrowers To Use Tax Credit For Down Payment

Posted by Orb Staff on May 29, 2009 No Comments
Categories : Residential Mortgage

deral Housing Administration (FHA) will allow home buyers to apply the new $8,000 first-time home buyer tax credit toward down payments for FHA-insured homes. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5% of appraised value or their closing costs. ‘We believe this is a real win for everyone,’ says Shaun Donovan, secretary of the Department of Housing and Urban Development. ‘Today, the Obama administration is taking another important step toward accelerating the recovery of the nation's housing market." The agency is implementing safeguards to protect borrowers from unscrupulous lenders, Donovan adds. "What we're doing today will not only help these families to purchase their first home, but will present an enormous benefit for communities struggling to deal with an oversupply of housing," he says. According to estimates by the National Association of Home Builders, the administration's homebuyer tax credit will stimulate 160,000 home sales across the nation, 101,000 of which will be by first-time buyers who will receive the credit. The FHA estimates that, because of its market share, thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage. SOUR

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