FHA Allowance of First Time Homebuyer Tax Credit

We recently heard that FHA may allow the first time homebuyer credit amount to be used as part of the down payment.
Here are ten important items to know about these recent changes:

1. The IRS tax credit refund can be made only to the taxpayer and not a third party.
2. Government agencies may offer tax credit advances with second liens.
3. The buyer cannot get cash back through the tax credit advance program.
4. The 2nd lien may not exceed the down payment, closing costs and prepaid expenses.
5. The 2nd lien may be “soft” or require payments
6. The payments on the 2nd liens must be included in the ratios unless deferred for at least 36 months
7. Balloon payments on 2nd liens may not be before 10 years.
8. FHA approved lenders and FHA approved non-profits may purchase the tax credit.
9. Tax credit purchaser may not charge more than 2.5% of the tax credit as a fee.
10. IRS may deduct from the tax credit: unpaid student loans, tax liens and garnishments.
We are still awaiting final guidelines before this program is available for use, so stay tuned!