According to the FHA policy issued on May 11, 2009, home buyers interested in FHA mortgage loan can get a short-term “bridge loan” in order to take advantage of their 2009 First Time Homebuyer’s Tax Credit. This way the FHA borrowers can use the loan as a down payment on their homes. In short, this helps borrowers buying their first primary residence to get a tax break up to $8000. Well, the tax break can only be claimed for purchases made in the 2009 tax year, so if you have still not availed the opportunity, you can still avail it.
As per initial laws, banks could offer bridge loans to borrowers so they could use their IRS money as a down payment on an FHA home loan, but later it appeared to be forbidding banks from offering down payment assistance. The revised rules let the FHA home loan applicants apply for these bridge loans, but you cannot use the loans to meet the FHA’s minimum 3.5% down payment. You can use money for other expenses.
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