How To Make An $8000 Down Payment On A Minneapolis Duplex

HUD Secretary Shaun Donovan

HUD Secretary Shaun Donovan

Remember when Congress abolished seller down payment assistance programs like Nehemiah and Ameridream last fall?

At the time, many Realtors saw the move, however well-intentioned, as disastrous to the housing market. See, while there are, believe it or not, many first time home buyers with excellent credit, they haven’t all saved quite enough for the FHA‘s required 3.5 percent down payment.

What’s more, one of the most traditional sources of down payment assistance; mom and dad’s 401(k), isn’t as plentiful as it once was.

Well, in an address to several thousand Realtors earlier this week, HUD Secretary Shaun Donavan said the Federal Housing Administration is going to allow its lenders to allow homeowners to use the $8000 first time home buyer tax creditas a downpayment.

Donovan said the change will help consumers buy a home.  According to the plan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. Via this mechanism, eligible home buyers will be able to access the funds immediately at the closing table.

The change had been called for by the National Association of Realtors.

Details of how all of this would work haven’t been announced.