HUD Secretary Shaun Donovan - in a much anticipated move, announced on 29 May the approval of the use of the 1st Time Home-buyer $8,000 tax credit as down-payment (or closing costs, etc) for FHA buyers.
Mortgagee letter 2009-15's Qualification guidelines are posted on HUD's website.
I have mixed feelings about this - on the one hand it can be a great vessel for my VA buyer-clients to use another option and move in with more equity, but on the other it amounts to another down-payment assistance program - which have been proven to result in a higher percentage of foreclosures.
Unlike previous programs like Nehemiah - the use of the tax credit is not intended to be a vehicle for lower-income families to purchase homes. Instead, it's purpose is primarily to free up frozen FHA credit lines by helping first-time home-buyers come up with the money for their 3.5% down-payment.
My mixed feelings come in whenever I see the government figuring out ways to give us a little money in order to borrow a lot of money. The guidlines seem stricter, though, so I'm hoping the predators don't come back out of their holes to feast on the uneducated and uninformed.
I would like to know your thoughts about this - I have a feeling the discussions on some of the great real estate forums will center on this issue for quite some time to come.