Use The First Time Home Buyer Tax Credit Now!

Were you considering buying a home this year and claiming the first time home buyer’s tax credit? If you were, a recent change to the credit may allow you to use it now rather than waiting until next year’s tax return.

The American Recovery and Reinvestment Act of 2009 allowed for a first time home buyer’s tax credit of up to $8000.  This would be money that could be claimed on your tax return.  Recent changes now allow a first time home buyer to apply the tax credit toward their down payment or closing costs.

From the US Department of Housing and Urban Development site:

Today’s announcement details FHA’s rules allowing state Housing Finance Agencies and certain non-profits to “monetize” up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.

The HUD site also has the Mortgagee Letter detailing the process.

Here’s a rundown of the tax credit:

  • This must be a FHA-insured home (your mortgage has to be backed by FHA).
  • This can be used towards the down payment or for closing costs.
  • As a down payment, the buyer must still put down 3.5% first.  The credit would be in addition to the 3.5%.
  • The home must close before December 1, 2009.
  • The credit does not have to be paid back unless the home is sold before you have lived there for three years.

This should really help stimulate home sales! Not only will it help first time home buyers purchase their home but it will also help current home owners sell their homes and move to new homes (some of the people the current owners will be selling to will be the first time home buyers).  This will also help first time buyers get lower interest rates because of a bigger down payment.

What do you think?  Are you planning on using the first time home buyers tax credit?

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Published or updated May 26, 2013.


  1. Oh, FFB, this is the best news we’ve heard recently! Why does the process take so long and the mortgage rate keep going up? This is a HUGE blessing. Fwding on post to everyone I know. =)

    • Glad I can help make your day! It seems I’m always in the wrong part of the cycle. We’re looking to buy but by the time we do rates will probably be higher.

  2. Miranda says:

    I’ve been kinda bummed about all this first time homebuyer stuff, since we bought our home in September 2007. Ah well. But this is great information for others! And, like you said, hopefully it will get the economy going.
    .-= Miranda´s last blog ..Has the Recession Affected Your Net Worth? =-.

    • Yeah, I know what you mean. We already own so we can’t use the tax credit. But for all I know it was beneficial to the person who’s buying our place so it’s all good!

  3. I would love to take advantage of this deal, but it looks like my wife and I will stay put for at least another year or two. My brother is about to close on a house and this will help them out a lot. 🙂
    .-= Patrick´s last blog ..Best Zero Percent Balance Transfer Credit Card Offers =-.

  4. Thanks for sharing the information! Buying a small townhouse or house is something my husband and I are looking at, but we’re making sure the numbers work for us.
    .-= Laura´s last blog ..How My Retirement is Currently Doing? (June 09 Update) =-.

    • First and foremost the numbers have to work. If the credit can help then that’s great. Hope it works out for you soon!

  5. Shouldn’t I simply wait for house prices to fall once mortgage rates rise? Seems like a better idea than chasing $8,000. (which will soon be bumped to $15,000, BTW)

    • I believe the $15k is a proposal in congress right now but it’s not yet a law. You would have to figure out what would work out best for you, higher house rice or higher mortgage. If it’s worth waiting then great.

  6. This is great–I’ve heard that there is a representative who is trying to get a $15,000 tax credit for anyone to use.

    It’s great news for my clients when I try to position them into better loans or better living circumstances. People need to try to get their living expenses as low as possible.

    I know it’ll help a lot of people in California where we are.

    • California has been hurt a lot by housing I hear. $15k for everyone would really help us out in our house buying. Let’s see what happens.

  7. I’ve just signed a contract on a condo with the assumption I’d get the $8000 stimulus at close, as numerous aricles have indicated. Unfortunately, while mortgage shopping, neither of the two lenders I’ve spoke to will give a bridge loan for the funds. One suggested I take it from an IRA (which would mean taxation) and repay it. I’m already taking $10,000 penalty-free from an IRA as a first time home buyer. Has anyone had a similar experience?

    • Is your loan FHA backed? Those are the loans that will benefit from the new change. Otherwise you can apply through a tax return amendment (don’t know the details though).

  8. Charles Richey says:

    I wonder how much the housing market will be affected when the credit is no longer available in December? There has been some talk of expanding it, but not much as far as an extension.
    .-= Charles Richey´s last blog ..Las Vegas Housing Market: Foreclosures Down, Sales Up =-.

    • There lies the problem with handouts – people expect them to keep coming. I think the expectation is the market will recover enough that it’s own momentum will take over so the stimulus will no longer be needed. (Still, I’d love to get $15k for buying a house).

  9. It says Up t0 $8000 tax credit? Where can I find how much I get (am eligible for)?


  10. Geez, I wish they would do something like this in Spain!
    Tax on purchases here is 6.5%, the market is on its rear end and total purchase costs are still running at an average of 10%!!!!

  11. Charles Richey says:

    It will be interesting to see what happens in November when it expires. With closings taking a lot longer in some cases, I wonder if they will allow anyone in escrow before the deadline to claim the credit.
    .-= Charles Richey´s last blog ..Las Vegas Property Auctions – Deal or No Deal? =-.

  12. When it comes to buy home, for first time home buyer is not easy to do. Because we must consider that lower payment rates should be chosen. Thanks for sharing this information
    .-= Tony´s last blog ..Pennsylvania PA Personal Income Tax Rates =-.

  13. If I bought my home in Nov 2007 is there credits for those who where ready to buy a home?

What Do You Think?