My office has been buzzing with the news that the $8000 tax credit for homebuyers can now be used as a down payment. Take a moment to read what Secretary of Housing Shaun Donovan really said to the National Association of Realtors meeting in Washington DC earlier this week:

“And we are taking action to further help the housing market recover. I’m excited to announce here at NAR that FHA’s policy on the “monetization” of the first-time homebuyer tax credit will soon be published. I know that you’ve been waiting anxiously to hear FHA’s position on the matter. We, like you, believe that this new tax credit is not only a tremendous opportunity for first-time homebuyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing. According to estimates by the National Association of Home Builders, this new tax credit will stimulate 160,000 home sales across the nation – 101,000 of which will be first time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first time buyer purchased their home.

We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to “monetize” the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.”

The entire speech can be viewed on the HUD website. Until the FHA actually pubishes details of the benefit, we don’t really know if it is benefit at all.

What we do know is that home inventory is high, interest rates are low and prices are low. The best of all worlds for buyers whether they get a tax credit or not.