HUD Announces Details on First-Time Home Buyer Tax Credit

On May 29, 2009, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced that the Federal Housing Administration (FHA) will allow home buyers to apply the Obama Administration's new $8,000 first-time home buyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that this will help stabilize the nation's housing market by stimulating home sales across the country.

The announcement detailed FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's detailed guidance, see their new mortgagee letter.

Stay tuned to www.njar.com for details from the New Jersey Housing and Mortgage Finance Agency (HMFA) on how the program will work for New Jersey residents.

Article Provided by NJAR