No Down Payment, No Problem!

iStock_000005505358SmallOk so the title of this blog sounds like a used car commercial, but this is a legitimate offer. If you qualify for the first-time buyer tax credit and you are using FHA to purchase a home this year you will soon be able to use the tax credit as the down payment on your home. Previously buyers would have to wait until tax season next year to receive this money.

Last week the Dept. of Housing and Urban Development announced that it will soon allow first-time buyers using FHA to access the $8000 tax credit for a down payment. This is good news for people who want to take advantage of the low interest rates and low prices, but do not have the necessary down payment or do not want to deplete their savings.

FHA loans require only 3.5% down payment as compared to 10-20% for most conventional loans. However, for first-time buyers who are just beginning to earn equity and build personal assets, 3.5% is still a lot to pay upfront.

Basically, the FHA lender will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table. More good news for first-time buyers and more details to come!



  1. The above comment is correct. The original post was in may and the plans for down payment assistance were adjusted. The $8000 tax credit will be able to be used as closing costs rather than the down payment. See new post for details.

  2. Hi Kathryn,

    My understanding of the 8K Tax Credit – is the first time home buyer still needs to come up with the 3.5% downpayment and the 8K can be used to pay for other costs like pre-paids and buying down the rate. I may have misunderstood the article I’ve read recently. Please correct if I am wrong.

    Thanks Kathryn.

    Tita Garcia

  3. What about folks who have bad credit? We want to buy a home and to stop paying renters. Is there any chance for us?

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