The Stimulus Package gave us the $8,000 tax credit for first-time homebuyers in February. It looks like now that buyers in Austin can use this tax credit for their downpayment. Is this the return of the zero-down home purchase in Austin?
Since February, home buyers have been able to claim a true tax credit of up to $8,000 when they purchase their first home (over $80,000 with income qualifications on the buyer). This credit could be applied for at the next tax filing.
For an FHA buyer looking at a $200,000 home, the minimum downpayment would be 3.5% or $7,000. Other out of pocket expenses for the buyer known as buyers’ closing costs can add another few percent to this.
So what’s changed with the tax credit? Department of Housing and Urban Development Secretary Shaun Donovan recently revealed that the FHA is going to permit its lenders to allow borrowers to use the $8,000 tax credit as the downpayment. Rather than wait for the $8,000 tax credit, buyers will get a short term loan which they can use as the downpayment.
So how would a buyer in Austin get a home for zero-down? On a home up to $228,500 in value, a buyer eligible for an $8,000 tax credit would be able to use the credit as the entire downpayment for the home.
A seller can also contribution up to 6% of the sales price towards the buyers’ closing costs, which can mean a first time homebuyer would have to bring zero cash to the closing table.
This is pretty significant for the first time homebuyers market in Austin which is already strong in areas like Mueller and Northwest Austin. The measures bring more ready willing and able buyers into the market, stimulating it even further.
Garreth Wilcock is a real estate agent in Austin, Tx. You can search Austin homes for sale at his website. Call or email for more information about buying a home with no downpayment and no closing costs.