Kirk M West's Blog

Very exciting news just hit regarding the use of the Federal First Time Homebuyer's Tax Credit for use during the purchase of the home.

The future credit can be converted into a loan. As we already know from my previous blog posts this loan can not be used for the down payment. However, HUD, FHA and the IRS are allowing the credit to be applied to the closing costs. The closing costs can include both recurring and non recurring types of costs.

Even though the minimum downpayment of 3.5% must come from the buyer or be gifted to the buyer by a family member this announcement is still very helpful and appealing to first time homebuyers.

Professional Tidbit: This should NOT take the place of the seller credits you ask for. It should SUPPLEMENT them. The funds can be used to cover the remaining fees not covered by any seller's contribution. The remaining amount can also be used to BUY DOWN the interest rate benefiting the our valuable clients for the life fo their loan!!

This is not in full swing. As we saw last week these things can change quickly. In addition, we do not have any sources (lenders or organizations) that have stepped up to the plate to provide loans against future tax refunds. It can take some time for the details to be worked out. You can rest assured that I will keep you posted.

I have attached a copy of the IRS form 5405 in which you or your clients will need to fill out when requesting the Tax Credit. The HUD Mortgagee Letter has also been posted for further details. 

f5405 FHA TAX FORM.pdf

Mortgagee Letter