PRESS RELEASE FROM WASHINGTON REALTORS
OLYMPIA, Wash. – The state Legislature has approved a strategy to help first-time home buyers come up with a down payment on a new home. The Legislature authorized a public/private partnership to provide for a “Tax Credit Advance Loan Program” in an amendment to the state’s general operating budget, which now awaits the governor’s signature. The Tax Credit Advance Loan Program, the first of its kind in the nation, is the result of a partnership of the Washington Realtors, Washington State Treasurer’s office, and Washington State Housing Finance Commission.
The approved budget brings the program one step closer for first-time home buyers, who would be able to use the recently approved federal tax credit at the close of a home sale for a down payment or closing costs.
"If this down payment program can be put in place, it will remove one of the biggest roadblocks to home ownership for first-time home buyers," said Greg Wright (Chelan), Washington REALTORS® President. "Down payment loans would open the door of home ownership to thousands of hardworking families that have had their part of the American Dream delayed. Combined with lower home prices, some of the lowest interest rates in history and the wider variety of homes available, this is a win for families in Washington and a key to our economic recovery.”
The program authorizes the state treasurer to deposit $25 million in a financial institution, which would then open a line of credit for the Washington State Housing Finance Commission (HFC). The HFC would use that credit line to pay for down payment loans to first-time buyers. Buyers repay the advance loan after filing for and receiving the tax credit. Washington Realtors are partners in the program and will provide up to $400,000 for deposit in the program account. The HFC would draw from those funds in the unlikely event of default by the borrower. Borrower eligibility, loan underwriting standards and other outstanding issues will be finalized when the budget is approved by the governor.
By putting the tax credit into the hands of first-time home buyers when they need it most, the program also would jump-start the state economy. According to a recent Washington Research Council study, every 1,000 home sales to first-time buyers generate 711 jobs and pumps $112.4 million into the economy. Every first-time home sale generates $11,100 in state and local tax revenue.
After the buyers return their federal refund the HFC can turn funds around and provide assistance to other buyers. The Tax Credit Advance Loan Program would leverage the state investment by revolving the funds as many as three times before the tax credit expires, reaching up to 9000 first-time homebuyers. The availability of these loans would expire at the same time as the federal tax credit, on November 30, 2009.
“The $8,000 tax credit opens a window of opportunity that may never be seen again," said Wright. "The state’s budget and this new partnership could help bring the opportunity for home ownership to families throughout our state who have been waiting to buy. For half of first-time home buyers, a down payment is all they need.”