Down Payment Assistance in the Form of Tax Credit?

© 2009, Brandon Cornett. All rights reserved.

Can you really get a check for $8,000 to put toward your down payment on a house, courtesy of the U.S. Government? Well, not exactly. But this may soon change.

Currently, the first-time home buyer tax credit offers a credit of $8,000, but you can’t file for it until after you’ve purchased the home. So there’s no way to use it as a form of down payment assistance at closing. But there’s a lot of Internet “chatter” about this changing in the near future, at least for FHA loans.

Here’s how it went down. Shaun Donovan, the current secretary of Housing and Urban Development (HUD), spoke at a meeting of Realtors earlier this month. He said the FHA was considering a change to the tax credit program — a change that would allow buyers to use the credit as down payment assistance on closing day. Essentially, it would work like a bridge loan. Qualified home buyers would get paid the $8,000 in advance, and would later repay the loan when they received their tax credit (months after closing).

But like I said, the bridge loan concept hasn’t come to fruition yet. Next week or next month … who knows. But as of right now, the credit cannot be used as down payment assistance by first-time buyers. We will certainly keep you posted.