There has been talk for some time about using the $8,000 home buyer tax credit as a down payment or for closing costs, but the details have been few and far between.  How, however, VHDA has created a specific program for this purpose, which makes it quite a bit easier...

Instead of waiting until you file your taxes next year, you can receive the $8,000 tax credit at closing if you are obtaining your mortgage through the VHDA program.  The $8,000 becomes a second mortgage with no interest and no payments for 12 months.  Thus, the $8,000 loan costs you nothing, and stretches the loan of the money through the time when you'll get the tax credit.

Providing even more flexibility, when you do get your $8,000 tax credit, you can either:

• Pay off the $8,000 second mortgage that helped with your closing costs and down payment.
• Keep the $8,000 tax credit cash for emergencies, home improvements, etc. and pay off the $8,000 over the remaining 29 years of your first mortgage at the same interest rate as your first mortgage.

A few caveats.... the second mortgage ($8,000) can't be any more than 5% of the sales price.  Thus, if you're buying a home for less than $160,000 you won't be able to borrow the full $8,000 from VHDA.  Also, you can't receive cash back at closing --- you have to use all of the loan at closing for down payment.  But don't worry --- in either of those scenarios, you'd still get the full $8,000 tax credit when you filed your taxes, you just wouldn't have borrowed all of it at closing.

Click here for the full program flyer.