First-Time Home Buyers: Use $8k Tax Credit For Down Payments Or Closing Costs?

BusinessWeek has an interesting article about a little known program that will allow first-time home buyers (technically, those who have not owned a home in three years) to use the 8k tax credit to offset down payments or closing costs.

From BusinessWeek:

Buyers who haven’t owned a home for three years or longer are eligible for an $8,000 tax credit, thanks to a provision in this winter’s stimulus package. Now, under a little-noticed program announced May 29, the Federal Housing Administration will steer the funds to cover closing costs directly-in some cases even offsetting the 3.5% minimum down payment FHA loans require. That’s enough to cover most or all of the down payment and fees for homes up to the U.S. median price, now about $169,000.

Of course, some think that the “no money down” lifestyle contributed to the housing bubble, and point out that buyers who receive down payment assistance default at a higher rate than those who don’t need it.

Will you take advantage of this program?

FHA Loans: Return to 0% Down [BusinessWeek]
(Photo:coffeego)

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  1. jscott73 says:

    Sweet, my three years will be up in two months…the $8k is a draw given the slide in prices as of late I’m just not convinced now is a good time to buy with or without the $8k.

  2. laserjobs says:

    0% down and cash back at closing is back!!! New and improved becasue the government is endorsing this failed pratice. The next wave of foreclosures now backed by the taxpayer.

    Awesome job guys!!!

    • stopNgoBeau says:

      @laserjobs: The difference here is that the rates are set by HUD, are not adjustable or inflatable, and there isn’t a “interest only” period at the beginning.

      In essence, assuming your escrow account doesn’t change, your first payment amount will equal every other payment you will make on the house.

      • KyleOrton says:

        @stopNgoBeau: 0% down also means that if prices dip again, a person needs to move for their job or any number of bumps come up, the person is muuuuuch more likely to mail in the keys than struggle through it.

        Also, person can get a much better deal if they don’t need to use an FHA loan so if someone had 5, 10, 20% to put down they would use it. And if someone is incapable of saving that much, they probably shouldn’t be buying a house.

        Skin in the game is very important.

        • stopNgoBeau says:

          @KyleOrton: When I received my HUD loan, it was the best to get. I got a 5 7/8% when the average was 7%. Three of my friends have received HUD loans since then, and all of theirs beat the going rate.

        • Jessica Schwartz says:

          @KyleOrton: Even 10% down for homes in my area is difficult to come up with ($30k + closing costs).

  3. Nakko says:

    Hopefully nobody will get in over their heads with a max home price of $169,000. Mortgage payments on that should only be around apartment rent rates anyway.

    I was definitely going to take advantage of this tax credit – if I am looking for my first house, why put it off till next year? But maybe now this will help me transition from renter to buyer, rather than giving me $8K to dump on, oh, say… fancy furniture to fill the place with (whatever).

    • Skankingmike says:

      @Nakko: not sure what world that’s in but a home that’s 169,000 in NJ is one of two things.

      A shit hole or a mobile home.

      • floraposte says:

        @Skankingmike: And here you can get a nice three bedroom. Which is probably why it’s the median.

      • Nakko says:

        @jscott73: (And to Skankingmike) I used to live in San Diego. I moved back to Texas for two reasons: First, all my family still lives here. Second, I’d never be able to (or want to) afford a little tiny crappy house for $500,000 whereas in Texas I can have a nice spacious three bedroom with – gasp! – a yard.

        I knew a guy who literally lived in Victorville, and commuted 3 hrs. every day each way (six hours in a car per day) to work in San Diego and back. That’s messed up. Move to greener pastures, people! =)

        • rioja951 - Why, oh why must I be assigned to the vehicle maintenance when my specialty is demolitions? says:

          @Nakko: Had a friend that couldn’t find anything to his liking there either. He ended up going on to tijuana and got himself a huge 4 bedroom 3 and a half bathrooms house. Don’t know why, back then he was single and without prospects to marry soon.

          The only drawback was to avoid the pileups at the border cross he had to come in to the office extremely early. Our boss ended up changing his hours to match his commute.

      • heismanpat says:

        @Skankingmike: I bought a 4-bedroom, 3-bathroom house in Omaha for under $150,000 back in February. Other than needing a new water heater, dishwasher and washer/dryer, it was move-in ready. It’s hard to beat the cost of living here.

      • Radi0logy says:

        @Skankingmike: I’m making an offer today on a 3 br/2.5 ba brick on half an acre with a fenced in yard, finished basement, partially finished second kitchen, two car garage and new carpeting throughout for $110,000. Might have to go up to $115,000 to get it. After $8000 tax credit, $10,000 down payment and regional $1800 tax credit I will be essentially buying the home for $90-95,000.

        30 minutes outside of Atlanta. But yeah, have fun in New Jersey :P

        • DollaValueLIFO says:

          @Radi0logy:

          Well, that does sound nice. But I hear the Atlanta-Metro commute is a bear.

          Wife and I just bought a home last August in the suburbs of Baltimore (Columbia, specifically). $330 for a 1350 sq ft town home. And we felt lucky!

          Real Estate is all about location, obviously, but we’re happy, and we were 0 down with a fixed rate under 5 for 30 years, so at least financially we’re all right.

          • DollaValueLIFO says:

            @DollaValueLIFO:

            Oh, and the pond behind our house has four ducks that NEVER leave. And one of them is hated by the other three. I call him lonely duck.

        • ChildeRoland420 says:

          @Radi0logy:
          $115,000 – 8,000 – 1,800 = $105,200
          $110,000 – 8,000 – 1,800 = $100,200

          Where do you get the $90-95k number from?

          • LastError says:

            @ChildeRoland420: He or she had another $10,000 of their own money for the downpayment. The math does work.

            @RadiOlogy: what part of Atlanta was this? I’m looking for something like that in the same area. Currently focusing on Henry county.

          • Radi0logy says:

            @ChildeRoland420: Offered 110k with them paying closing costs to get that down to a relative $106,700. Taking out the $9,800 takes you to $96,900. Assuming $10k down thats $86,900 in mortgage. I’m sure we won’t put that much down even though we could (house needs paint and appliances). You weren’t factoring in the down payment, which technically I am paying for, I was just implying that the amount of my mortgage will be below $100,000 for a $150,000+ house.

        • LastError says:

          @Radi0logy: If you don’t mind my asking, what part of Atlanta was this?

          I’m looking for a house just like that in the same “outside Metro Atlanta” area. Currently focusing on Henry county. Would really prefer Cornelia or points north but that is a 2 hour commute for me.

          • Radi0logy says:

            @LastError: The house we settled on was in the Snellville area. I work in Lawrenceville for that commute is kind of meaningless as I don’t really have to head towards Atlanta.

            The boss and I looked in Norcross, Duluth, Lawrenceville, Snellville, Buford, Sugar Hill and Suwanee. We found that we were getting the best ratio of home for the money, along with a decent location and pretty good neighborhood in Snellville. No kids so school system didn’t factor in. We looked over in Cumming/Alpharetta/Roswell/John’s Creek as well but houses were just much more expensive there and most of the “upside” wasn’t a huge draw for us. We almost bid on a house in Suwanee but found out after looking at it that it already had a contract on it.

            I wouldn’t live on the South Side of Atlanta if you paid me. We have a pretty good agent, I can put you in touch if you like.

    • sanjsrik says:

      @Nakko:
      In NYC, there’s isn’t a chance in hell of getting an APARTMENT for under $350k. Where on this earth are people buying homes for this price? Oh, wait, Omaha.

      • uncle moe says:

        @sanjsrik: omaha and everywhere else that’s 100 miles off shore…beaches are expensive

        • BarbadosSlim says:

          @uncle moe: I love it when people tell me to “just move to where real estate is cheaper”. First of all, it doesn’t matter how much a house costs if I’m unemployed, which I would be. Second, the reason houses cost more where I am is because there are a lot more people. Why are there a lot more people? Because it’s BETTER here.

          • sir_pantsalot says:

            @BarbadosSlim: WOW! Your logic and intellect are mind boggling.

            Because there are more people in one place that place is better. That is why so many people are trying to find places to live in inner-city neighborhoods. China and India must be Heaven on Earth.

          • uncle moe says:

            @BarbadosSlim: that’s a dumb argument to begin with. housing is cheap inland because everything is cheap inland, including your services to an employer. you get paid less = cheaper houses.

      • catastrophegirl chooses not to fly says:

        @sanjsrik: NC for me

    • Paul Fulkerson says:

      As good a time as ever to buy. Last year, when I was 19, I was approved for a mortgage with NO credit to my name. Again, no credit cards, nothing. I then bought a foreclosed house in my town for $43k, spent less than $2k fixing it up, and moved in. It’s by no means a run-down shack, either, and sits on half an acre in a nice area.

      I pursued the homebuying route when I found out it was more expensive to rent around here. The best part is that my payment is 456 dollars per month. It’s near impossible to default on that, ever.

      Of course, the tax credit I got this year was icing on the cake. Buying was one of the best moves I’ve made.

  4. RStui says:

    I paid $0 down and got cash back at closing under my VA benefit. This is not necessarily a bad thing, so long as credit isn’t given to those that can’t afford it.

    It wasn’t the $0 down and cash back that made people default. It was the fact that they were given $250,000 of loan on $30,000 of salary or less.

    • Elcheecho says:

      @RStui: which wouldn’t have been possible had buyers been forced to pay any sort of real percentage as a downpayment. But…point taken.

    • jwinston2 says:

      @RStui:

      The report linked in the article disagrees: [papers.ssrn.com]

      Or as stated in the article “But while seller financing is riskiest, buyers who get down payment help have higher default rates, whether the money comes from government or other sources.”

  5. catastrophegirl chooses not to fly says:

    doing the first time homebuyer thing right now – important info to note:

    if you aren’t using the above program [i am not] you can also reduce your withholding now to get chunks back in each paycheck or you can file an amended 2008 return

    if you are going to do this, as my lender found out at the last minute [this morning, we close next week] the borrower needs to sign an affadvit stating they haven’t owned a home in the last three years AND provide proof in the form of the last 3 years worth of tax returns… sigh… got 2008, 2007 on hand. 2006 is in the storage unit with the rest of my stuff, waiting to move into the house that i can’t close on until i find that piece of paper [and they put the new roof on the carport!]

  6. dougp26364 says:

    Nothing like getting shafted by the feds under the appearance that they’re “stimulating the economy.” It’s always good to know that my tax dollars are going to help those who have found out that the Feds will help them when they refues to help themselves. Personal responsiblity has gone out the window. Can’t afford something basic such as a place to live because you have all those bills like, your cell phone, your cable TV, your video games, you MP3 players, or any of the other trinkets you really don’t need (or can afford). No problem, you friendly Uncle Sam with all those taxpayer dollars is going to be there to bail you out.

    As for all you responsible adults who actually manage their own finances appropriatly. Uncle Sam is there for you too. Uncle Sam needs YOUR MONEY to fund those poor unresponsible taxpayers who just can’t seem to get ahead in life. He needs you to keep working, paying tax bills, bailing out the banks (who by the way are sticking it to you with higher interest rates, fee’s and now grace period on your credit cards) and bailing out the auto industry so that more people don’t hit the unemployment lines causing your friendly Uncle Sam to come back and hit you up for more of you hard earned dollars to cover the additional mess he’s made.

    Handouts only encourage more handouts from those that quickly learn they don’t have to produce anything or be resonsible for their own actions. Somewhere I heard the saying, Democracy ends when people realize they can vote themselves a raise. We seem to be in a visouse cycle and, when it comes to an end, it’s really going to hurt.

    • jscott73 says:

      @dougp26364: I assume you are talking about the corporations too, right? Especially since they have way more weight in what the government does then any us of lowly individual taxpayers.

    • Anonymous says:

      @dougp26364:
      Yeah thats nice, except for the fact that many people have paid far more than the value of the tax credit to the IRS. I have personally paid nearly 3x the value of the tax credit in the last year alone, so I am only getting my own money back. Thanks for playing, though.

    • youbastid says:

      @dougp26364: The $8,000 is not a bail out for home buyers that failed. It’s a stimulus to get people buying again. People that CAN afford it have been hesitant about buying because they think values will continue to drop. That’s the idea behind this.

      • MsAnthropy says:

        @youbastid:

        Exactly. It’s a nice little sweetener for people who’ve been saving and planning to buy, and are now thinking “wait, the economy’s in the toilet, is now really the right time? Maybe we should wait….”

        Right now it’s not that easy to get approved for a mortgage unless you have reasonably decent credit, a job, all those things that should have been prerequisites for anyone getting a mortgage, ever. First-time buyers don’t have a house to sell (and thus don’t have the problem of not being able to buy a new place because they owe more on the old one than it’d currently sell for) and, if they can meet the requirements for mortgage approval, are pretty much the only thing keeping the housing market from stagnating altogether right now. The tax credit is just something that might help the waverers take that plunge.

        And please… enough with the “failed homebuyers” crap. People buying homes now aren’t the ones getting loans far in excess of what they can ever afford to repay, with shitty credit and no need to prove income.

    • Mizzle fo Shizzle says:

      @dougp26364: I just bought my first house (I close on Friday).

      Am I ready to buy a house? Absolutely.
      Can I afford a house? You bet.
      Would I have even started looking this year if it wasn’t for the tax credit? I’m not sure.

      I have a lot of friends in my situation (a few years out of college with a stable income) who are scooping up houses in my area (Minneapolis/St Paul) for 60% of what they sold for 5 years ago.

      This is NOT a handout. It’s getting first-time homeowners into the glut of available properties out there.

      I would like to hear your idea to solve the current housing situation.

  7. Anonymous says:

    Woah everyone! I am a mortgage broker in Portland, OR. There are currently NO lenders that will go for this. Borrowing down payment? I don’t think so. This has to be done by a state agency, of which there are few states that have it, but NO lenders are going to want these loans…100% financing?? Um, yea, that is (partially) how we got here in the first place!

    • Sudonum says:

      @LinetteSiren:
      FHA will give you an advance on the tax credit, with quite a few caveats, the first being that you have to qualify for an FHA loan. In any case the lender is not financing 100% of the loan, just giving the buyer an advance on the tax credit, with the FHA’s blessing.

    • Jason Giglio says:

      @LinetteSiren: The market is desperately trying to correct for the failures caused by the Fed’s loose monetary policy, but the government is fighting it tooth and nail, trying to force the bubble to stay inflated.

      Crazy isn’t it?

  8. rpm773 says:

    We closed on our first home in June 2007, and our home has lost at least 10% in value. Sure, perhaps I’ll eventually benefit somewhat from any uptick in the market from this program, but it still annoys me. Enough about me and my problems, though.

    I think saving 20% of the house’s value is the sacred part of getting a home. You prove to yourself that you can save, and are responsible enough to own and maintain a home – by continuing to save. When banks and/or the government come along and undermine that process, i think that’s where the problems begin.

    That’s not to say that those living under a tight budget who can’t save a down payment are irresponsible. But if your budget is so tight that you can’t put together a down payment, what happens when you have a $10K repair job on your home?

    • Scuba Steve says:

      @rpm773: 20% of $150k is 30k. I guess if you can save that kind of money then you’re good to go.

    • Mizzle fo Shizzle says:

      @rpm773: I understand where you’re coming from, but I don’t think that making a 20% down payment is the best way to prove you’re ready to buy a home – but if you have that much saved, you probably should be buying one.

      You have to stick your neck out a little to be a home owner. That’s one of the risks. Don’t be irresponsible, but there comes a point where you just need to make the leap.

      • rpm773 says:

        @Mizzle fo Shizzle: When putting 20% down, you’re still borrowing 80%. I think that’s enough risk.

      • econobiker says:

        @Mizzle fo Shizzle: Sure 20% down but buy a house that is only 80% of the mortgage that you qualify for. That is where you have to reign in the agents/mortgage brokers who say buy the max you can get because it gets them a higher commission.

        My cousin said that one of the most dejected sighs he ever heard over the phone was when he called his mortgage loan guy and told the guy that, even though he (single guy no debt) had qualified for a $160,000 loan, he was buying a $97,000 house (small house in rural NC).

    • DollaValueLIFO says:

      @rpm773:

      Clearly you live in an area where a 20% down payment is actually possible. My wife and I would have had to save up $66,000 to put 20% on our town-home. We went through a no-money down, no closing cost program that didn’t care about credit scores/debt. They lived in my colon for six months, every bank statement, student loan payment, pay stub, etc. was required. We went through underwriting not once but three times.

      Our interest rate is fixed below 5% and we make our payments without a problem. I’ve paid all of my credit cards off and now we have two car payments and student loans, but over 10k in the bank (largely because my wife never had cc debt while I did).

      • rpm773 says:

        @DollaValueLIFO: 20% down is possible anywhere. For us, 20% was $82K. And we did it. And the closing costs were another $17K on top of that. We got an $8K seller’s credit at closing due to issues with the house, but we had the $99K up front and ready to go. We were first time buyers with no equity in any other property.

        What happened here is that the inflated demand for housing due to easy credit drove prices up, making people feel that traditional routes were no longer an option. So they considered putting less down, which inflated demand even more, which caused prices to continue to rise. Couple that cycle with the idea that just getting into house for very little money down made wise investment sense; one could flip the house in two years and make make money. Many markets became unstable, and we’re now seeing the fallout from it.

        I won’t pass judgment on you or your financial practices/situation, as everyone is different. I just think most housing markets are better when dominated by conservative buyers.

  9. Belabras ate my dingo! says:

    …Only on FHA insured loans, which you can only get if you have the right debt to income ratio.

  10. HawkWolf says:

    So, if I were to qualify this and I used it, and was able to pay my mortgage, would I be a jerk for riding on other taxpayers?

    I’m contemplating whether to keep renting (which means finding a better place to live, maybe a rental house that hopefully won’t get foreclosed out under me, than the one I’m in right now) or try my hand at finding a nice house.

    • Mizzle fo Shizzle says:

      @HawkWolf: Owning is a lot more expensive than renting. Make sure you’re ready for mortgage+insurance+repairs+utilities+furniture+yard work.

      It’s a great time to buy a home, but you shouldn’t jump the gun (that’s how we got into this mess in the first place)

      • reservoir_dog says:

        @Mizzle fo Shizzle: That can be true but is not necessarily always the case, especially when you consider a portion of the payments you make toward your mortgage will come back to you as equity. If you’re smart, working with a loan that you can actually afford to take out, and plan to stay in the home for a minimum of about 5 years, sometimes you can’t afford not to buy. It’s smarter financially, especially if you purchase something with additional space that you could rent – in the right area you could have cashflow immediately that you could either put in your pocket or apply to the mortgage to accelerate the payoff.

        You have to really know what you’re doing to make this work, though. Renting is absolutely a better option for many, especially those that plan to move fairly frequently.

        • econobiker says:

          @reservoir_dog: I completely echo that bit about renting if you are mobile and about buying some sort of income property (duplex or over the garage apartment, etc).

          Sometimes you can rent more than you can buy. But do perform due diligence on the owners to make sure they aren’t getting forclosed. When the wife and I were recently looking for a larger rental place, she laughed as she showed me some craiglist listings that had places for rent at typical market rates but specified that the rental may be sold at any time with 30 days notice to the renters. Can you say “short sale” or “pending foreclosure”?

  11. jwinston2 says:

    If I recall the government tried something similar to this in 2006?

    [www.washingtonpost.com]

    Yes, I can see how this is going to turn out well.

  12. sicknick says:

    Alright…so around here (I live just north of Detroit) we have some unbelievable deals on houses right now. HUD homes especially are going for ridiculous amounts. These are not your typical foreclosures, either, but basically turnkey homes after you put down new carpet and new paint, going for between 20-30 thousand. Sure, they aren’t perfect, but at that price, it’s a steal.

    So, my question, let’s say I’m picking up a 25K home. I can then use the 2500 as the downpayment? As long as I find a lender who will do such a small amount for a Mortgage?

    We’re talking getting a 3 bedroom home for under 200 dollars a month, which is less then I’m paying to rent a bedroom in a friend’s house two blocks from the one I have in mind right now.

    • jameleon says:

      @sicknick: Best of luck on getting a home around those prices. There are similar deals in Las Vegas but buying one has been extremely difficult. The banks who own these homes are only interested in cash purchases and turn up their nose at someone holding mortgage approval. Maybe it is different in Michigan though.

  13. Landru says:

    Isn’t this a tax credit? Doesn’t that mean that when you do your taxes at the end of the year, you will get the $8000.

    After you have bought the house.

    How will that help with closing or down payment?

    • Belabras ate my dingo! says:

      @Landru:
      This allows you to apply the eventual tax credit at time of closing. Essentially the government is giving you the money ahead of time so you can get the house.

    • Sudonum says:

      @Landru:
      Yes, the FHA will give certain borrowers an advance on their tax credit, but they’d get the money anyway when they filed their taxes in 2010.

  14. robocop is bleeding says:

    I bought my first home a few months ago and received the 8k. I was able to file an addendum to my 2008 taxes, so I got it pretty soon after buying.

    I don’t think this money should be used for the downpayment. That’s something you save or beg from relatives. The 8k is for all those other expenses that you didn’t know about, repairs you saw that were needed coming in, or stuff you need for the new house.

    My wife and I spent 3k of it on stuff (couches, fridge, etc) and have saved the other 5k as an ‘Oh, Crap!’ fund, which has already come in handy when calling up plumbers in emergency situations.

    • baquwards says:

      @robocop_is_bleeding: That is exactly what we are doing, 3k for furniture, fridge etc.. and 5k as the house fund. We will have a 1 year home warranty from a reputable company so not too many worries about fixing things. I will probably continue the warranty, $425 per year vs. $6000 HVAC unit is a no brainer to me.

  15. dadelus says:

    This is shaping up to be the year to make big purchases. Buy a house and write off $8k. Buy a car (at DEEP discounts if you buy in the next week or so) and write off the sales tax. This could have made for a big return in next years taxes.

    Too bad I bought a car four years ago and a house two years ago. :(

  16. FreakinSyco says:

    Having literally closed on my first house two days ago:

    I don’t think this is a good idea. If someone can’t save up the few grand to close on a house then they have no business buying a full house.

    Personally, I’m going to use the $8k to redo the floors and kitchen of the house I bought.

  17. h0mi says:

    If I had sold my condo in 2006 and not rebought another place, I could’ve taken advantage of this (even though with a pile of cash from that hypothetical 2006 sale, I wouldn’t exactly need help).

  18. The-Tree says:

    We just purchased a home
    we live a debt free life until the home came along, we had 20% down and extra cash for closing.

    so we are putting the 8 large back in the “oh crap” savings account. gotta have 6 months of standbye cash, coupled with some stuff going to the retirement fund.

    but by large the 8k we will get will go to the savings account.

    I am a first time homeowner at 29 years old BTW…just to put it in perspective.

    • Brian Traylor says:

      @The-Tree: Same story here but I wasn’t even aware of the $8k until after we closed. I just put it in the bank and am using it for extra principal payments.

    • econobiker says:

      @The-Tree: Nothing wrong with being a first time home buyer at 29 especially if you are living debt free.

      I was a first time home buyer in 2002 at age 33 but my ex-wife lived the mega debt lifestyle. If I had the amounts that we had paid in interest, late fees, and over limit fees we would have had a great down payment.

      Instead we got one of those bogus 80/20 loans with the 20% as an adjustable rate home equity loan. You know, I read that and knew that the 20%was bogus and would go up in three years so all those people say they didn’t understand are full of it. We refied into a 100% conventionial about 16 months later in 2003 to bail on the 20% . By the time the marriage was cratering in 2005 -partially due to her spending and for some other reasons- she took out her own loan during one of those mysterious periods when her credit cleaned up enough to make her look like a good risk.

      I quit claimed the house for $10 and didn’t look back on it… She bought $11,000 worth of new furniture for the house now that all of my “used furniture” was gone. Hmmm, wonder how she afforded that…

  19. vk2tds says:

    This program was basically copied from Australia. When GST was introduced in 2000, the Government started the First Home Buyers Grant, of A$7000 for a pre-used house, and A$14,000 for a never lived in home. This was to offset the GST price increase in new homes.

    [In areas in the Far West of NSW around Mad Max country of Broken Hill, some people actually got free houses with no mortgages. House prices have since increased.]

    Late last year they increased this for about a year to A$14,000 and A$21,000 respectively. It is for people who have never owned a house, and if they have a SO, their SO must never have owned a house either.

    This is a far better idea than our ‘First Home Buyers Saving Account’, where you can invest A$1000 or more per year with the government matching some contributions and no interest payable. This would have been good, except that you must leave the money in for at least four years, and if you marry or move in with someone in that time who owns a house then you must immediately move the money into your 401K equivalent. Same if you buy a house yourself (or inherit part of one) within that time. No way to pay off the mortgage with the funds. ARGH!

  20. sonneillon says:

    While I think this is a stupid practice and disagree with it on principle, it’s a good deal and I’m going to take advantage of it.

  21. Chris Lehr says:

    Already had! We closed April 15th or so, filed out 5405 early with the known closing address and had the check in our account before closing!

  22. Noah Burnett says:

    I will be taking advantage of it but not because we don’t have the down payment but because it will help with closing costs and we will have more money left over that can go in to any house repairs or stuff that needs to be purchased sooner then later.

  23. chiieddy says:

    No, because we won’t qualify. Even though my husband isn’t on the deed of this home, I own it, so it counts as us both owning it.

  24. Anonymous says:

    I’m closing on my first home this month, but I have to wait to get the 8k until next year. If I was able to get the 8K now it would be a huge help as my 7% downpayment has now changed to 10% (My loan isn’t FHA but conventional, and the loan terms changed on me causing me to put more down) and I’ve now exhausted most of my savings. Getting the 8K now would be helpful so I would have a large cushion in case of emergencies, but since I can’t get it right now I just plan on living meagerly for a few months and then putting the 8K directly into savings minus a few improvements to my new place when I do get it.

    And as to the people thinking the 8K isn’t helping the market, I’m a 23 year old who saves most of the paycheck and hadn’t even though about buying a place before. But after learning about the 8K I ran the numbers and buying a place is about the same as renting so the 8K definitely pushed me to buy.

  25. Kimberly Gist-Collins says:

    I think it is awful. If people can’t save 3-5% for FHA loans or 10-20% for conventional, then they shouldn’t own a home. Closing costs can often be negotiated with the seller, especially in this economy. But not having the discipline to save even a tiny down payment? Heck no.

  26. Kimberly Gist-Collins says:

    I also am pissed to know that MY tax $$$ is going towards helping anyone make a down payment on anything. We received no help with our first home from anyone. It’s called savings and discipline.

  27. Fran Hagler says:

    I am a loan officer. I have actually researched this program and under the FHA guidelines, the borrower still has to put down 3.5% as far as I can tell. I don’t see any lenders letting anyone get away with an $8000 credit for a down payment/closing cost without giving any of their own funds. The job of an underwriter is to figure out the risk, not just push through paper. I think MOST of them have learned their lesson. This is probably a good program for some people. There are strict guidelines such as limits on income, debt to income ratio, subject property price, credit score, etc. This is not a program that just anyone can use. It is the same program that was previously given back on your tax return and is now given back sooner to help borrowers more quickly.

  28. LeonieNike says:

    Thanks for info on down payment assistance programs. However, I have a mortgage now, and am in trouble. Do you have any ways to save on mortgages, any gov’t help, if have a mortgage now? I think a program called Hope now? This site http://www.needhelppayingbills.com mentions there is one, but doesn’t have the details. Thanks in advance.

  29. reservoir_dog says:

    I agree with all the folks who say you should save that down payment, and that having that money shows financial responsibility and puts some of your “skin in the game” as one commenter put it. This is always a good thing.

    However, if one were financially responsible and preparing to purchase a home prior to the announcement of this credit anyway… why not take advantage?

    As long as the banks do their part, and the prospective homeowner doesn’t bite off more than they can chew, this won’t be a problem.

    The two things that “got us into this mess” were:

    1) Reliance on the fact that the value of a home will always increase and never decrease and

    2) The idea that home ownership is a right, and is appropriate for everyone. This is simply not the case.

  30. Jevia says:

    In some markets, its pretty tough to come up with 20%. Suburbs in my area of moderately sized 3 BR houses run $300,000, so 20% of that is $60,000. That’s a lot to save up for, and as has been pointed out, FHA loans only work for those with the “right” debt/income ratio. Student loans, plus any other debt (car loans, credit cards) can wipe out that “right” ratio pretty easily.

    It isn’t the down payment (or lack thereof) that is the big problem, its the fact that people were buying homes who had no or very little income, or very unstable income. I keep reading stories in my newspaper of people with foreclosure problems that bought houses solely on disability income, or minimum wage income, etc. These people should never have been allowed to get a home loan in the first place, they should have just continued to rent apartments. Not everyone is entitled to own a home.

  31. lonestarbl says:

    I am filing my 1040x and 5405 today! Free money, weeeee!!!!!!

  32. johnfrombrooklyn says:

    When did 20% become the magic figure? Why not 25%? Why not 15%?

    • joshua70448 says:

      @johnfrombrooklyn: If your equity is less than 20%, the borrower tacks on PMI (Private Mortgage Insurance) to help ease the risk on your loan. Once you’re over 20%, the PMI is removed. If your down payment is 20% or more, then you never have to deal with this.

      • baquwards says:

        @joshua70448: unless you are like me and have a credit union making a 100% loan with NO PMI, or points.

        We saved money for a down payment but when we were offered the 100% we took it and it will enable us to have a years worth of mortgage payments in the bank, which is more important to me than having “skin in the game”.

  33. joshua70448 says:

    I bought a house earlier this year, but we’re just going to use the $8000 to finish buying furniture and rebuild savings. We were able to afford buying the house on our own (granted, with a 3.5% down payment and sellers covering a ton of closing costs) and the $8k is just a nice bonus.

  34. suburbancowboy says:

    Wow. 169k? Where I live that won’t even get you a boarded up run down shack.

  35. beernut says:

    My girlfriend and I were planning on using the 8K to pay off all our credit cards. This seems like an awesome way to save some interest between when we buy a house and when we file our taxes.

  36. heart.shaped.rock says:

    $169K? Sheesh. Here that MIGHT buy you a shack in the ‘hood and we’re just a small city. I’m waiting for the housing market to crash here, like it has elsewhere, so I can finally get out of this damn apartment!

  37. LastError says:

    Probably going to grab this. I am paying a lot more in rent than a similar -or even a much better house with two TWO bathrooms- would cost. The only thing keeping me from doing that is the down payment, which is affected in part by the rent I am paying.

    Rent now = 1200 a month. Better house = maybe 850 a month including taxes and other stuff.