Last week, we heard the announcement from HUD Secretary, Shaun Donovan, that the $8000 tax credit would now be available for down payment assistance at closing. Lenders would provide it through short-term bridge loans on federally insured mortgages (FHA).

It was received favorably from real estate agents, lenders and builders because it would open more doors for first-time buyers. Not everyone responded with enthusiasm. It was said that it too closely resembled a now illegal practice of “seller-funded down payment assistance” where the seller provided a “gift” to the buyer to help with closing. Because it was provided as a “loan”, it was more debt instead of the savings that is required for a down payment.

The loans would have probably been at a high interest rate as well. It was shot down by the IRS also as it could have created income-tax issues.

So it’s back to the original plan. The $8000 tax credit for new home buyers is available for those homes bought between 1/1/09 and 12/1/09. However, it is received after the buyer files their taxes next year.