In a zippy, an unexpected twist, HUD announced today the $8000 tax credit can be used as a bridge loan to help cover closing costs as well as an addition to the 3.5 % required down payment. First time homebuyers must still cover the 3.5 % down payment and use of the credit can not be applied to cover the 3.5%.
Please keep in mind that a first time homebuyer is someone who has never owned a home, or who has not owned a home in the last three years.
Today FHA approved lenders were given the go ahead to develop these bridge-loan products utilizing the $8000 credit.
The tax credit can be used for additional down payment and cover closing costs or to buy down interest rates. Frequently closing costs come to around 3.5% of the purchase price so this credit being applied can really be the kick some prospective homebuyers are looking for.