The $8000 Tax Credit: Can A West Bloomfield MI First-Time Homebuyer Use It For A Down Payment?

The $8000 tax credit: Can a West Bloomfield MI home buyer use it as a down payment? Well…if you ask the federal government they will say “YES”!, but if you ask any first time home buyer trying to purchase in West Bloomfield, Farmington Hills, Farmington, Livonia or anywhere, they will tell you “NO”! Why is this?

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The American Recovery and Reinvestment Act of 2009 that was passed into law in February of this year allowed a first time home buyer to receive an $8000 tax credit for purchasing a home before December 1st, 2009. Can you imagine that out of all the legislators with their big law degrees, no one considered the fact that a first time home buyer won’t benefit much from a tax credit, because what is first time home buyer’s biggest struggle? Money for the down payment. I guess, since they are all wealthy, it wouldn’t have  occurred to them, that some people have problems coming up with a down payment.

Enter FHA, the insurer of nearly 50% of all loans being done today. FHA is also government, so they get there people together and after 6 months they pass a policy in June, that allows the tax credit to be used as a down payment. The Secretary of Housing Shaun Donovan had a huge press release, drew a lot of attention, and everyone was excited and proud of themselves for implementing such a great program.

So…the FHA guidelines now allow FHA approved lenders and government agencies to either purchase the tax credit or give an advance in the amount of the tax credit in the form of a second mortgage. It seems FHA never asked any FHA Lenders or Government Agencies if they would be willing to participate in this program. With Lenders and mortgage companies going bankrupt left and right, how many have an extra $8000 laying around for each home buyer to buy their tax credit? And for the government agencies that want to participate, they will take another 6 months to work out the details of how they will offer this program to buyers and they’ll likely have it approved by December 1st, 2009, the day the tax credit ends.

So for those first- time home buyers that can come up with the cash to purchase beforse December 1st, you will enjoy the nice check you’ll receive next year. For assistance with your home purchase feel free to call me with any questions you may have. Go FHA!