You may have seen several posts here with varying degrees of information regarding the $8000 tax credit as it relates to down payment assistance. At first, it was not available. Then there was an announcement that it would be added that it could be used for down payment assistance. A week later, that announcement was retracted and down payment assistance was not available with the $8000 tax credit. So, now, the teeter topper flips again…

The latest, I’m told, HUD announced down payment assistance is now available again for FHA-approved vendors through a bridge loan for the $8000 tax credit to monetize it up front to assist with closing costs, pay down interest points or to put down additional down payment outside of the 3.5%. So buyers will still need to come up with the 3.5% required for an FHA loan on their own, if they take advantage of the loan.

What I do not have much information on at this point is the “bridge loans”. My instinct is that if you go this route you should be careful because it’s a “loan”. Make sure you are well acquainted with how this works. You’ll need to talk to your lender about the terms and implications to ensure it’s actually more beneficial for you to take the loan to monetize the tax credit before it would normally be available (after you file your taxes next year.)