Addendum to the last post regarding using tax credit for FHA financing...

Hello again,

 

This is an addendum found on Activrain to the previous post in regards to the FHA down payment with their tax credit.  Please read and let me know if you have questions.

Thanks!

 

 

Best regards,


Chun Liu, Real Estate Consultant for life!
Team WOWWHEE.com at Keller Williams Coastal Properties
(562)961-1409 direct (562)889-8898 cell
aka Chun@WOWWHEE.com www.WOWWHEE.com 

 

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In regards to FHA loans, a borrower can only obtain monies for their actual downpayment of 3.5% by the following :

• Their own funds
• up to 100% of a gift from a relative/family member
• From the Federal, state, and local governmental agencies and nonprofit instrumentalities of government
• FHA approved non-profits 
• monies from their employer in a form of employee contribution
• monies from secured borrowed funds... IE. borrowing equity from your home to buy another home or borrowing against your car that is free and clear or borrowing from your 401-k, etc, etc

 Here is the major confusion that was put out yesterday both HUD, NAR, and many realtors and loan officers that wrote about this.  In the body of the mortgagee letter, ML 09-15, at the bottom, it stated :

The Tax Credit: Short-Term Loan: 

Entities that can offer the tax credit advance with short-term loans:

• Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or "bridge loans" secured only by the anticipated tax credit due the homebuyer as collateral.

 The confusion : It states, As collateral and not as a secured lien against the home, but as a secured loan against the collateral. Which in this case would be the $8,000 tax credit, which would be secured against.

Because of this, HUD does not allow for monies to be borrowed or given to in any form that I did not mention above, to be used for the down payment.  The reality of it all, basically everything that was stated in the mortgagee letter, that has been revoked for now, is old school FHA. When it comes to FHA loans / FHA mortgages, you could get monies for your down payment from the items that mentioned above, which is mentioned in the mortgagee letter.  Well, was mentioned...  One caveat to all of this is that HUD was going to allow for lenders to secure a short term loan or bridge loan against the $8,000 to be used to purchase a home. But again, that can't be used for the actual down payment, because it goes against the basic FHA guidelines of downpayment monies of 3.5%. Now, unless HUD changed this, it does not clearly state this in the mortgagee letter, even though that letter is no longer valid.

 

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Best regards,


Chun Liu, Real Estate Consultant for life!
Team WOWWHEE.com at Keller Williams Coastal Properties
(562)961-1409 direct (562)889-8898 cell
aka Chun@WOWWHEE.com www.WOWWHEE.com