The American Recovery and Reinvestment Act of 2009 On May 29th, U.S. Housing and Urban Development Secretary Shaun Donovan announced that the Federal Housing Administration (FHA) will allow homebuyers to apply for the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country by allowing first-time Home Buyers to use the $8,000.00 tax credit for Down payment and Closing Costs. What this means is that anyone who has not owned a home in the last three years may take the $8,000 credit and apply that toward additional down payment above and beyond the FHA required 3.5% minimum, and also towards closing costs. This will allow purchasers with very little money up front to be able to purchase a home. The U.S. Housing and Urban Development estimates that this will generate up to 160,000 home sales (101,000 first time home buyers and 59,000 existing home owners who will purchase a home after a first time buyer purchases their home). Closing costs will include loan fees, pre paids for insurance, HOA pre paids and transfer fees. If buyers have non-perfect credit it might be beneficial to apply some of the tax credit towards buying down the interest rate. The biggest change from 2008 to 2009 is that this is a true credit and never has to be repaid. There are restrictions for occupancy and ownership. The buyer does have to maintain the home as their primary residence for 3 years or the tax credit has to be repaid. To read the release from HUD click Here |