$8,000 first time home buyer tax credit for down payment

Joe Martin — Mon, 01 Jun 2009 15:27:15 +0000

The HUD has given approval for first-time home buyers to use their $8,000 tax credit for additional down payment money or to help with your closing costs.

So how will this work? You will need to obtain an IRS Form 5404 from the IRS website to get started. The money will be credited towards your down payment or closing costs at the close of escrow then you will be required to pay the money back when you get your tax credit.

Yes you need to pay it back. This is not money going directly from the government to the lender, it is money being promised by the government to the lender. After you purchase the house you can amend your 2008 tax return and get a credit of up to 10% of your home purchase price up to $8,000.

Once you receive the check from the government you will need to use it for what it was intended for. If you choose to use it on furniture instead of the purpose that is okay, but the money you had promised as a down payment of to help cover closing costs will not be turned into a second mortgage on your house.

You will still need your 3.5% down for your FHA loan, this additional money will be added on top of that 3.5% if you choose, not in replacement of. When you are talking to your lender about your FHA loan tell your lender you are interested in using the tax credit for additional down payment money and they will get you started.

You can also use the money toward your closing costs. Again you will need to tell your lender you plan on using the first-time home buyer tax credit for your closing costs and they will get you started on the paperwork.

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$8,000 first time home buyer tax credit for down payment