Brokers Corner


State partnership finds way to turn federal tax credit into down-payment assistance.

OLYMPIA, Wash. - The Senate Ways and Means Committee last night unanimously approved a measure designed to help first-time homebuyers come up with a down-payment.  The committee adopted the measure as an amendment to the proposed Senate biennial operating budget.

The proposal would make the $8000 federal tax credit for first-time home buyers available at the closing of a home sale instead of when a buyer files a tax return. Homebuyers would repay the $8000 after filing for and receiving a tax refund. The amendment creates a Tax Credit Advance Loan Program and authorizes the State Treasurer to deposit $25 million in a financial institution giving it the ability to open a line of credit to the State Housing Finance Commission to provide the down   payment loans. The deposit would not deplete state funds, but would provide liquidity for the financial Institution to lend its own funds. 


The program is the first of its kind in the nation and would work as follows:

  • The State Treasurer’s Office would make an off-setting deposit in an FDIC-insured short-term
     account with a selected financial institution. The investment would earn a low interest rate to 
     stay fully insured under federal guidelines.
  •  Realtors and other stakeholders back the loans with funds to provide security against losses.
  • The financial institution provides the Washington State Housing Finance Commission a line of
     credit to advance up to $8000 to qualified first-time home buyers for a down-payment.
  • Buyers repay the advance loan after filing for and receiving the tax credit.


Lack of a down-payment is the only barrier to home ownership for up to 50 percent of first-time home buyers, according to J. Lennox Scott, Chairman and CEO of John L. Scott Real Estate.  A recent study by the Federal Reserve Board showed that home ownership for people 35 years and younger increased by as much as 43 percent when a primary mortgage was combined with a down-payment assistance loan.

First-time homebuyers are the most critical to the recovery of the housing market and our overall economy, because their purchases set off a chain reaction of buying and selling," Scott explained.  "The first step toward stimulating the state housing market is making the federal tax credit available at the closing table and increasing down-payment assistance."

For more information contact your local John L. Scott Realtor

360-683-4131 or 1-800-998-4131

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