For First-Time Buyers in Virginia that qualify, VHDA is now offering a a new program that allows you to secure a second loan to pay for your FHA down payment and some of your closing costs. The second loan is interest-free for the first 12 months (you just pay principal which on a loan of that size should be minimal). You then have the choice to use your up to $8000 first-time buyer tax credit to pay of the balance of the loan or use the credit for other purposes and continue to pay off the loan over the 29 remaining years with an interest rate equal to your first trust.
Complete details and guidelines for the First-Time Homebuyer Tax Credit Plus Program offered by VHDA
This is definitely a WIN WIN for first time buyers who either don’t have the down payment money on hand or those who have saved up the money and want to leverage it along with their tax credit. If you have any further questions or would like to explore acquiring your first time using this new program, please feel free to contact me.
smalltown banker you need to do your homework. your comment "Your commentary is not only inaccurate it is without substance. First of all the $8,000 tax credit is not received prior to the sale so it is not replacing down payment. FHA down payment requirements were increased from 3.00% to 3.5% and the ability to finance part of closing costs was eliminated at the same time. One must file for the tax credit after closing on a home so the funds are not used for down payment unless a loan is made against that anticipated tax credit. That is a very uncommon practice."
guess what, the use of the tax credit as the downpayment is a very common practice. go to fha website FAQs (federalhousingtaxcredi...) see question #19.
"...some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment..."
this mechanism of using a 2nd to fund the downpayment via a housing agency is why the adminstration recently provided $35 billion to housing authorities and allowed fannie and freddie to buy up to $20 billion in housing agency bonds.
fha is taking substantially risks with taxpayer monies, which are fully endorsed by the chairman frank of the house financial services committee as quoted in the NY Times on october 9th:
Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that the defaults were, in essence, worth it. “I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”
smalltownbanker, you may live long enough to regret this quote
"The FHA program has historically performed well and its insurance fund has adequately covered its losses. The same goes for VA and USDA Rural Housing programs. Comparing these to the programs that led to failure in the marketplace is ridiculous and unsubstantiated."
the best thing about this is that time will tell if your view is correct.
Posted by: no money down mortgage | November 23, 2009 at 02:13 AM