The
State of Florida, one of the hardest hit by the burst of the Housing Bubble in the most current economic crisis, found a big problem with the Federal Tax Credit for New Home Buyers. It was a credit given to them at the end of the year, or whenever they filed their taxes.
So Charlie Crist and the Florida Congress decided to do something about it. Back on May 27th, 2009, Florida
Governor Charlie Crist signed the SB 2600 Budget Bill into law. The budget details how Florida will spend the $65.6 Billion of its funds in the current fiscal year which started on July 1st of the year.
Included in that bill was the “Homebuyer Opportunity Program” to help with down payment assistance for homeowners eligible for the Federal “First-Time Home Buyer Tax Credit” of up to $8,000.
With the Homebuyer Opportunity Program, Florida homeowners can apply for down payment assistance before they close on their purchase. Then when their IRS tax credit comes in, they just send it in to the state to repay their loan. Best of all, the loan is interest free.
The
Federal Housing Administration approves of this practice, now permitting lenders to provide a short-term bridge loan to qualified homebuyers for the purpose of accessing the Federal tax credit. While it cannot be used to cover the FHA-Required minimum down payment of 3.5%, it will allow them to use the tax credit in these ways:
- Make a larger down payment above the 3.5% required minimum down payment
- Use it to cover closing costs
- Use it to “buy down” their interest rate
However, unlike with lenders, Florida is exempt from this rule, permitting those who access their tax credit under the Homebuyer Opportunity Program to use it against the FHA-required down payment to reduce it.
Other resources that are available for Florida homebuyers who need assistance with the 3.5% down payment are the Florida Housing Finance Corporation, along with many local government agencies and non-profit lenders.
Florida has so far approved $30.1 million for its program, which was also extended when the Federal Tax Credit was extended more recently, and will end when the Federal Program ends or they run out of money. The program is funded by doc stamp taxes.
Lastly, since local housing authorities and governments are maintaining the loans for the State, once the money is paid back, they can keep it and use it locally for affordable housing projects. This makes it a win/win situation for homeowners and local governments.