FHA To Allow Tax Credit as Downpayment

Aspiring homeowners can now use their $8,000 tax credit as down payment for mortgage loans, the Federal Housing Administration (FHA) announced yesterday. Lenders backed by the FHA will be allowed to monetize the credit using short-term bridge loans from the government.

U.S. Housing Secretary Shaun Donovan announced the change at the Real Estate Summit: Advancing the U.S. Economy in Washington, a day-long meeting attended by several thousand realtors. Donovan added that further changes proposed by the National Association of Realtors (NAR) are under way.

The tax credit can help many buyers, including first-time ones, get better loan terms and more easily afford their mortgages. The change is in line with the government’s goal of reviving consumer credit, which will help the U.S. economy back on its feet.

Donovan believes that the housing market is showing signs of stabilization. Since January, he said, home sales have played around a safe figure and the decline in property values has started to slow down.

For more on mortgage loan, mortgage loan modification click here.

Earlier in Government:
New Rules for Home Loan Modification Begin June 1, 2010
Government Steps Up Loan Modification Anti-Fraud Efforts
Government Gears Up for Financial Literacy Month, Warns Against Scams

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