FHA Makes 1st time buyers eligible for $8,000 tax credit:
Thousands of first time homebuyers will be able to get short term loans so they can quickly make use of a new $8,000 tax credit to pay for some of the costs of buying a home. The Federal Housing Administration on Friday released details of a plan in which borrowers who use FHA loans can get advances from lenders that let them effectively receive the credit in advance, so they don't have to wait to get the money from the Internal Revenue Service. Most borrowers will still have to come up with the FHA's required 3.5 percent down payment, unless they work through a state or local housing agency or an approved nonprofit. Ten states have such programs in place, according to the national council of state housing agencies. But there are many other potential uses, such as for closing costs and fees, or to beef up the down payment beyond the minimum level. The FHA which insures about a quarter of new home loans, is projected to guarantee about 2.2 million loans in the next budget year. Any buyer who has not owned a home in the past 3 years is considered a first time buyer and eligible for the program. Borrowers can claim the credit by filing an amended 2008 tax return or can wait for their 2009 return. The change "will present an enormous benefit for communities struggling to deal with an oversupply of housing," Housing secretary Shaun Donovan and in a statement. The tax credit was included in the economic stimulus package signed by President Barack Obama in February. It is not available to individuals with incomes above $95,000 or couples with incomes above $170,000 and expires November 30. Real Estate Agents and homebuilders generally welcomed the change. Jerry Howard, chief executive of the National Association of Home Builders, called it a "great step in the right direction." On Wall Street, shares of such builders as Toll Brothers and D.R. Horton rose on the news. Still, some real estate agents were concerned that many buyers wont benefit at all if they can't use it for a down payment- a big hurtle for many first time buyers. - Intelligencer Journal 5/30/09
