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| Texans May Now Use the $8,000 Tax Credit for Their Down Payment and Closing Costs—If They Qualify |
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Following the announcement by the U.S. Secretary of the Department of Housing and Urban Development in May that the Federal Housing Administration would allow its lenders to monetize the $8,000 tax credit that was part of the American Recovery and Reinvestment Act of 2009, the only remaining issue was that the State of Texas did not have a program in place that would allow Texans to take advantage of this opportunity.
That has now changed.
At the end of June, Texas became one of at least 13 states in the U.S. that has a program to allow first-time homebuyers to use the $8,000 tax credit for closing costs or even the down payment. The program is a short-term loan that allows the buyer to use the funds at closing but then must repay them when the tax credit is received from the government.
While the program is being administered by the Texas Department of Housing and Community Affairs, homebuyers must go through one of the approved, participating lenders that will help guide them through the process. A list of lenders may be found by visiting www.myfirsttexashome.com.
There are now two available programs in Texas that will allow consumers to utilize the $8,000 at closing. The first program is a 90-day down payment assistance program. This 90-day, short-term loan will allow the lender to provide 5% of the primary mortgage up to a limit of $7,000, which may be used for down payment and/or closing costs. The second program is the Mortgage Advantage Program, which allows 120 days to repay the assistance, which can be 5% of the primary mortgage up to $6,000.
All mortgage applicants must still qualify for the $8,000 tax credit, and meet the requirements set out by HUD and the FHA. Among the additional requirements of the Texas program are completion of a mandatory pre-mortgage educational course and the required filing of an amended 2008 tax return with the IRS. According to the TDHCA, amended IRS returns are usually processed within 8 to 12 weeks, which will allow enough time to repay the loan from the state.
There is also a $250 program fee for both programs. And since there is a limited supply of funds for these programs, they are both on a first come, first served basis. That means that once the initial funds have been depleted, the homebuyers would have to wait for the funds to be repaid to the state before additional funds would be available to the next buyer.
Obviously, there are so many programs and details, that it is important to have your client contact their tax advisor to see if your client might qualify. For more information, please visit www.myfirsttexashome.com.
Here is another link to an interesting article on the First Time Homebuyer's Tax Credit from CNN.com.
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