First-time Homebuyer Credit

[Anonymous]

I have been hearing conflicting information regarding the first-time homebuyer tax credit. My agent tells me that the credit can be applied toward the down and closing costs, whereas the broker told me that is not definite and that it can't be applied. Does anyone have an idea who is right? The reason I ask is that I was in the process of buying a condo (had offer ready to go) and had to pull out at the last minute because of the down payment issue. Use of the tax credit would help me get over the hump, but the mortgage broker told me that I could not apply it toward the down. FYI on the loan, the loan was going to be an FHA loan on an approve condo complex. The mortgage broker told me the down would be a minimum 25%, is this also correct?

[Anonymous]

Last I heard, you had to come up with at least 3.5% for the down payment on an FHA loan and then if you wanted to apply the tax credit as additional down payment or as closing costs, you could.  But, I have yet to hear of a bank or lender that has a program set up for this..  Here's a link from the FHA site http://www.hud.gov/news/release.cfm?content=pr09-072.cfm

[Anonymous]

Hmm...yeah the mortgage broker told me that it would be 3.5% down initially when I was looking at homes. Then I went back and asked her if that changes for condos and she said "yes" and then told me I would need to put 25% down. That is quite the jump in down payment. I do not quite understand why there is a such a big gap/difference. Granted, FHA probably does not want many condos on its books, but that is a considerable difference.

[Anonymous]

I've heard a lot of people have problems buying condos with FHA, and if you do go for it has to be an FHA approved condo. I've never heard anything about the 25% though. That might have been specific to your situation or to that condo.

As of now, the 3.5% still needs to be your own funds. You can, however, use it for down payment beyond the 3.5% or closing costs if you chose to do so as long as your lender accepts it.