FTHB Credit upfront

Anonymous · ‎12-23-2009

Hello

I have been reading through the info my realtor put togther for me about the tax credit. Is it possible to get it in advance to use for closing costs?

I am doing an FHA loan for a condo and it seems that you can only use the tax credit after you have the 3.5 % down payment.

Thanks

Anonymous · ‎12-23-2009

you generally have to buy the house before you get the credit. There are some local progrmas that allow you to get an "advance" on it basicly, but it can only be used to supplement your down payment or closing costs. You still need the 3.5% down and those programs are very few and far between.

Anonymous · ‎12-23-2009

Some states have programs that will loan you the money until you get the tax credit. Usually you pay a fee and/or need to take a class. Texas is one of these states, which would be very helpful for me and my wife (about to try to buy a house), except that Texas's program has run out of money.

You'll have to check on the legality, but it seems the best way to go about this is for a family member to gift the money to you to help with your down payment. Later on, when you get the check for the tax credit, you will probably be compelled to give a similar gift to that family member. My understanding is you're not allowed to borrow the money except through an approved program, so if a family member is willing to help you out it needs to be with the understanding that, as far as things in writing go, their contribution to your down payment is a gift and not expected to be repayed.

Anonymous · ‎12-23-2009

RevMen

Be carefule on the advice you give. We can not give advice on here that encourages what would be mortgage fraud. They are very strict about that no matter how harmless the advice would really be. Telling someone to have funds gifted to them and to report them as gifted funds but to re-pay those funds with the tax credit is telling that person to commit mortgage fraud.

Also, to OP. Even if you find a local assistance plan such as the Texas one mentioned by RevMen, you still have to have the down payment. It can only be used for closing costs and to supplement down payment, not for the minimum down payment.

Anonymous · ‎12-24-2009

@Anonymous wrote:
Be carefule on the advice you give. We can not give advice on here that encourages what would be mortgage fraud. They are very strict about that no matter how harmless the advice would really be. Telling someone to have funds gifted to them and to report them as gifted funds but to re-pay those funds with the tax credit is telling that person to commit mortgage fraud.

Wise words. To be clear, I'm not advocating anything, only relaying what information I've been given. I tried to be sure to indicate that I'm not aware of the specifics legally, and that needs to be looked into. I'm sure someone here knows better.

@Anonymous wrote:
Also, to OP. Even if you find a local assistance plan such as the Texas one mentioned by RevMen, you still have to have the down payment. It can only be used for closing costs and to supplement down payment, not for the minimum down payment.

I'm not sure that's completely accurate:

http://www.federalhousingtaxcredit.com/faq1.php

Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement.

My understanding is that loans against the tax credit from lenders may not be used to satisfy the 3.5% down payment completely (only supplement), but loans from government institutions may. This would explain why our state housing authority requires people to take a short series of classes on home ownership before issuing the loan, something I wouldn't expect a private lender to do.

Anonymous · ‎12-25-2009

I can have the 3.5% if needed for the downpayment. My parents offered to help me if need be. I can pretty much the save the whole thing easily in the next few months, I have just read that sometimes they like to see the money during the process, and not just at the closing. My parents would gift it to me anyway, not loan it.

Thanks everyone!