Based on an announcement on the HUD website last Friday, it seems that the question of how the $8000 tax credit can be used is much more clear!

Thankfully, there are safeguards in place to protect borrowers from getting into the type of situations that helped start the housing implosion in the first place.

In summary, the announcement indicates that state Housing Finance Agencies and certain non-profits will be allowed to “monetize” the tax credit.  So, that means that in qualifying transactions, buyers will be able to use the tax credit up-front as part of a downpayment.

The tax credit can’t be used to fund the minimum 3.5 percent downpayment required by the FHA, but it can be used as additional downpayment funds, or to offset some closing costs.  I’m sure the “safeguards” mentioned in the annoucement will result in a set of requirements that must be met before the tax credit can be monetized.  But, at least we’ve got some additional direction, meaning that it would be worthwhile to investigate how the tax credit could be used by your buyers who meet the “first-time homebuyer” definition.

The National Association of Home Builders estimates that the use of the tax credit will increase home sales nationwide by 160,000.  That number is comprised of first-time homebuyers using the credit, and home purchases made by people who were able to move because their “old” homes were purchased using the credit.

It sounds like this could be a good thing for first-time homebuyers and sellers alike.  Spread the word!