WASHINGTON -- Thousands of first-time homebuyers will be able to get short-term loans so they can quickly make use of a new $8,000 tax credit to pay for some of the costs of buying a home.
The Federal Housing Administration on Friday released details of a plan in which borrowers who use FHA loans can get advances from lenders that let them effectively receive the credit in advance, so they don't have to wait to get the money from the Internal Revenue Service.
Most borrowers will still have to come up with the FHA's required 3.5 percent down payment, unless they work through a state or local housing agency or an approved nonprofit. The FHA which insures about a quarter of new home loans, is projected to guarantee about 2.2 million loans in the next budget year. Any buyer who has not owned a home in the past three years is considered a first-time buyer and eligible for the program. Borrowers can claim the credit by filing an amended 2008 tax return or can wait for their 2009 return.
