The Federal Housing Administration (FHA) has plans to allow first-time homebuyers to use the $8,000 tax credit as a down payment. FHA guidelines will be released soon. (See this post for more info.)
But about 12 states have already started such a program by making bridge loans available to borrowers who are eligible to claim the First-Time Homebuyer Tax Credit. The bridge loans are provided through arrangements with local housing finance agencies.
This is a win-win for everyone. More buyers are able to purchase homes. Local areas increase tax revenue via new property taxes. Neighborhoods are improved with fewer vacant homes. And eventually, we will see increased property values and a revitalized economy.
Treasury officials were sold on the notion that the money loaned to home buyers would not only be paid back when tax credits took effect, but also increase state funds. In many areas, every 1,000 home sales can represent approximately $140 million in new tax revenues. This is significant.
So far, the program has been successful, with thousands of loans granted to first-time home buyers.
The number of states participating is expected to increase after HUD/FHA announce the details of their program.
Some of the areas already allowing the tax credit as a down payment are: Baltimore, Missouri, Pennsylvania, New Mexico, the state of Washington.
Keep an eye out here for program information. Just type “Tax Credit” in the search box.
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