HUD Makes It Official: Tax Credit Available for Limited Uses for Kansas City Home Buyers
Under a policy released by the United States Department of Housing and Urban Development (HUD) on May 29, FHA-approved lenders are authorized to develop bridge loan products that enable homebuyers to access the $8,000 first-time homebuyers’ tax credit at the closing table. Under this guidance, FHA-approved lenders can offer bridge loans to homebuyers that allow them to use the proceeds of the tax credit to pay for closing costs, buy down the interest rate on the loan or cover the portion of the downpayment that exceeds the minimum required 3.5 percent downpayment for FHA loans.
These bridge loans cannot be used to cover the minimum required 3.5 percent downpayment on FHA loans. As a result, homebuyers applying for FHA-backed financing with an FHA-approved lender that offers a tax credit bridge loan program can use these funds to bring down the upfront costs of buying a home significantly, but they will still be required to come up with the minimum required 3.5 percent downpayment.
In certain states, state housing finance agencies have developed their own tax credit bridge loan program that allows homebuyers to get assistance for the entire downpayment requirement on FHA loans. However, Kansas does not have a state housing finance agency and this program is currently not available here.
Information presented by the Dowell Taggart Team - http://www.DowellTaggart.com