Home buyers may soon be able to use $8000 for down payment!

(Yeah, it looks like home buyers may soon be able to use the $8000 tax credit as down payment! HUD has been flip flopping on this issue recently....Read the story below for details)

Feds offer more help with down payments
By Greta Guest/Detroit Free Press (Courtesy of Lincoln Journal Star)
Saturday, May 23, 2009
With bargain prices, low interest rates and an $8,000 federal tax credit for first-time homebuyers, it seems like the perfect time to buy a first home.
But apparently, many potential first-time homebuyers aren’t getting the idea — and federal and state officials are looking to sweeten incentives.
The word from Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, is that the Federal Housing Administration will allow its lenders to let first-time homebuyers use the recently enacted $8,000 tax credit as a down payment.
Details are expected in the coming weeks.Going back to last year, the first enticement was a $7,500 tax credit that had to be repaid.
That didn’t inspire too many buyers.Then earlier this year, the $8,000 federal tax credit for first-time buyers was rolled out, a huge help for people who want to take advantage of local home prices at pre-2000 levels.
But the down-payment help is even better news. For buyers, it makes it easier to finance the home. For the housing market, it could get the ball rolling.
This represents an about-face from last fall’s decision under President George W. Bush to cut off down-payment assistance because these loans tended to default more than ones where the buyer put money into the deal.More buyers are using FHA loans as lending has tightened for conventional loans, so the impact could be wide. FHA requires a down payment of 3.5 percent.
FHA-insured loans make up more than 17 percent, according to its most recent market share report.It could take up to two months for the down-payment assistance plan to be available.
It would work by giving buyers short-term bridge loans, effectively fronting the tax credit at the closing table, Donovan said.