$8,000 Tax Credit, and how you can get it before closing to use as your down payment!

90-Day Down Payment Assistance Program

If you are qualified for the First Time Homebuyer's Tax Credit but are a little tight on cash for the down payment...then THIS is the plan for you.


PURPOSE: To allow the consumer to take advantage of recent legislation by receiving a short term loan prior to filing for and receiving the federal first time homebuyer tax credit.


~Key Points~

1. 5% of the first lien mortgage amount up to a maximum of $7,000 for down payment and/or closing costs. Must be used with FHA financing. Primary residence only.

2. Each homebuyer must complete a pre-purchase homebuyer education course. The buyer can go to www.mgic.com and sign up for a FREE online buyer’s education course.

3. Funds are limited and available only for qualified purchases made by December 1, 2009 to eligible buyers on a first come, first serve basis.

4. Repayment: The 90-Day Down Payment Assistance Program offers 0% interest for 90 days. Failure to repay the down payment assistance loan in full within 90 days will result in monthly payments of principal and interest for 2 years with an interest rate of 10%. Under this scenario, a homebuyer borrowing approximately $7,000 would have a 2nd lien note of approximately $323/month.

5. Immediately after closing, the buyer can file a 2008 amended return—IRS form 1040X and form 5405. The IRS will then send the buyer a refund check for $8000 as part of the Federal First Time Homebuyer Tax Credit. The buyer can use this money to payoff the $7000 lien from the State of Texas. Remember, the federal tax credit is 10% of the price of the house up to $8000. Refunds are generally processed within 8 to 12 weeks coinciding with the 90-day 0% interest loan.

6. Buyers must qualify with the $323/month payment included in their debt.

7. Buyers must occupy the property for 3 years or the IRS will recapture the assistance in the tax year the property is sold.

8. Consider a 45-60 day transaction from start to finish. The file must be first underwritten by the lender for approval. Then, a package is sent to the state that is estimated to take up to 20 more days for finalization. Rush transactions are not for this program.

9. $250 cashiers check is required from the buyers own funds payable to TDHCA.

10. Income Limit: Single Taxpayer: $75,000; Married Taxpayers filing a joint return: $150,000.