Using Tax Credit As Downpayment Would Jumpstart Duplex Market

While things seem to be heating up in the Twin Cities duplex market, some states are cranking up the thermostat even further by implementing bridge-loan programs that advance first time home buyers the cash they need to purchase a property.

For all intents and purposes, the loan acts as a second mortgage that becomes due whenever the buyer of the property receives their first time home buyer tax refund from the IRS.

I have encountered numerous credit-worthy first time borrowers out there. However, many do not have enough money saved for the minimum 3.5 percent FHA down payment requirement. While parents have always been a resource for many first time home buyers, many parents have seen their availability of extra funds shrink with their 401(k).

States that have created some variation of a down-payment loan program are: Missouri, Colorado, Delaware, New Jersey, Tennessee, Idaho, Washington, Ohio, Pennsylvania and New Mexico.

While I have not heard of an equally innovative program in the works for Minnesota residents, it never hurts to suggest one to your representatives in the state legislature.