Short-term loans to help first-time homeowners
WASHINGTON — Thousands of first-time home buyers will be able to get short-term loans so they can quickly make use of a new $8,000 tax credit to pay for some of the costs of buying a home.
The Federal Housing Administration on Friday released details of a plan in which borrowers who use FHA loans can get advances from lenders that let them in effect receive the credit in advance, so they don’t have to wait to get the money from the Internal Revenue Service.
Most borrowers still will have to come up with the FHA’s required 3.5 percent down payment, unless they work through a state or local housing agency or an approved nonprofit. Ten states have such programs in place, according to the National Council of State Housing Agencies.
The tax credit was included in the economic stimulus package signed by President Barack Obama in February payday loan. It is not available to individuals with incomes above $95,000 or couples with incomes above $170,000 and expires Nov. 30.
Real estate agents and home builders generally welcomed the change.
Jerry Howard, chief executive of the National Association of Home Builders, called it a "great step in the right direction."
Still, some real estate agents were concerned that many buyers won’t benefit at all if they can’t use it for a down payment — a big hurdle for many first-time buyers.