FHA to allow use of first time Buyer tax credit for down payments

Put that $8,000 to work for you in the purchase of your first home.  FHA plans to allow first time Buyers to use the $8,000 federal tax credit towards their down payment on a home.  Through the use of short-term bridge loans, the plan will allow Buyers to borrow the funds from approved non-profits, state and local government agencies.

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment," Shaun Donovan,  Secretary of U.S. Department of Housing and Urban Development said.

FHA will soon release details on the new program.

Last month, the Washington Legislature approved a program to provide the credit as a temporary loan, although that has since run up against an IRS rule barring taxpayers from designating someone else to get their refunds.  Once those details are worked out this will be a great option for those wanting to use the tax credit to help with their down payment.  The first time buyer tax credit will essentially become a form of down payment assistance.

Read more in the Aubrey Cohen Seattle PI article