FHA Plans to Offer $8,000 Upfront to First-Time Buyers
U.S. housing officials are working on a plan that would allow some first-time buyers to purchase homes by paying little money upfront.
First-time home buyers would be able to put the $8,000 income tax credit towards their down payment on loans backed by the Federal Housing Administration (FHA.) Right now, home buyers must wait until they file their taxes to receive the credit.
The FHA is finalizing a program that would allow approved lenders, non-profits, and state and local governments to fund short-term loans that could be used as down payments to be repaid once the borrower received the tax credit. Once they received their tax credit, they would pay off the short-term loan and put equity into their home.
The FHA requires a minimum 3.5% down payment on loans backed by the agency, which means that buyers could put little or nothing down on homes up to $230,000.
The proposal is drawing some comparisons to the seller-funded down payment assistance programs that the FHA has worked to shut down. These programs allowed buyers to move into a home without paying any of their own money for the down payment. A concern is that the lenient underwriting standards, low down-payment requirements, and now the ability of FHA borrowers to purchase a home without putting any of their own equity into the purchase is creating a tremendous risk for the program and taxpayers in the future.
Readers, would you be more likely to buy a new home if you could spend this tax credit before you file your tax returns?