Can I use the Tax Credit $8000 for a down payment?

Asked by Ladyjewels, Bartlett, TN Sun Mar 14, 2010

I don't understan the tax credit very well and was wondering if the $8000 can be used instantly when buying my first home. I am looking to buy in the Bartlett (Memphis) area. Also i would be interested in a contract for deed. Any advice or help? I also have some money saved. looking for a 3 bedroom, 2 Full Baths, Livingroom, den and a NICE size kitchen. I seen a home on Mill Creek Cove, and sent for more info.

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Jeanne Feeni…, Agent, Warren, NJ
Sun Mar 14, 2010
Hi there, you've gotten good responses so far, I'll add a link to a recent Blog post that highlights the requirements and mechanics of the Tax Credit which may be helpful to you:…

Good luck to you,
Jeanne Feenick
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1 vote
Don Tepper, Agent, Burke, VA
Sun Mar 14, 2010
Your basic question has been answered already: Because the tax credit is contingent on the purchase of a property (and your meeting various other conditions), you don't get the tax credit until you buy. So--with the exception of certain plans that will "advance" you the equivalent of the tax credit--no.

Regarding your question regarding contract for deed, two thoughts:

A contract for deed won't qualify for the tax credit unless you meet some other conditions. From the IRS web site at,,id=206291,00.html :
Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations?

A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (7/2/09)

So, for instance, to have a contract for deed qualify, you'd need to have the right to construct improvements; you'd need the obligation to pay property taxes; you'd need to be responsible for insuring the property; and you'd need to be responsible for maintaining the property. All of that's possible under a contract for deed, but you'd have to make sure that the documents covered those points.

Another point: If you're looking for contracts for deed, I recently wrote a blog on how to find lease-options and similar arrangements. See…

Hope that helps.
1 vote
Jaime Osborn, Agent, Germantown, TN
Sun Mar 14, 2010
Hello, just like the others above said you may not use it as a down payment, BUT there are three down payment assistance programs that may qualify for to help you out, Shelby county offers a loan of up to 3500 payable at 5% interest over 10 years, THDA offers a grant of up to 4% of the homes value to be used for down payment and closing costs, and there is another one called N.A.C.A. Which may be available as well feel free to call me at 490-3542
1 vote
Memphis Owne…, , Tennessee
Tue Mar 16, 2010
Yes, you can in Tennessee. Be careful taking advice from out-of-state pros. I'm in East Memphis.

Tennessee has a bond program that sllows you to use the tax credit upfront. Please call me at 901-212-5095 if you'd like more details. I am an actual lender who can get you into the program. The current rate is 4.98% with a 30-year fixed rate.
0 votes
Julia Odom, Agent, Cleveland, TN
Sun Mar 14, 2010
The only way that I am aware of to do this is to get your financing through THDA. They will provide a 2nd mortage 'loan' which you can use for your downpayment. This loan is designed to be repaid when you receive your tax credit. The current interest rate for this program is 4.98% so it's a really good deal if you qualify. Only certain lenders are able to loan through THDA so consult with your agent to get some referrals.
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0 votes
Alma Kee, Agent, Tampa, FL
Sun Mar 14, 2010
Dear Lady Jewels,

Google your county name and Affordable Housing.

Some counties are advancing the money "before" so a buyer can use it for their downpayment. You may have to use an "approved lender" on the county list so go visit their site and call them on Monday.

Also you need to find a local Realtor to help you find a house.

Good luck!
0 votes
Anna M Brocco, Agent, Williston Park, NY
Sun Mar 14, 2010,,id=206293,00.html see IRS link, and you may wish to consult with uour tax professional for additional information regarding qualifying IRS codes. The tax credit is being issued after the transaction is completed. If you wish to take advantage of the tax credit, you need to be in contract by April 30, 2010 and close by the end of June 2010--any local agent can help with your search/purchase, etc.
0 votes
Bud Zeller, Agent, Folsom, CA
Sun Mar 14, 2010
NO, it is only a tax credit when you file your federal, (IRS 1040 FORM) taxes.
0 votes
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