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It is a known fact that many people buy their first home with at least some help from the bank of Mom and Dad.  Like prudent loan officers everywhere, Mom and Dad may need some convincing that the kids are ready to buy and won't require monthly help to make the payment.   Especially if they are homeowners themselves, they need little convincing though, that homeownership is good deal, especially when the numbers show that there is little difference in the mortgage payment vs. their current rent in DC.

With the Home Buyer's Tax Credit in play, there are a couple of exciting ways for parents to help their children buy now.  While you can't sell your kids the family home and get the credit, you can help them buy another place.

If they are already credit worthy, you can help them with the downpayment, especially if they are going FHA.  IRS rules allow gifts of up to $10,000 per person per year.  When they go the $8,000 back, you can your money back - or consider that you are virtually "giving" an extra $8,000 to apply toward their payments or to furnish the new place.

If they aren't ready to get a loan on their own, you can also co-sign an FHA loan with them, maybe even help them with the 3.5% downpayment, and let them amend their taxes to get the credit now.  As noted above, this approach could help them buy the things they needed for the home when the credit came back. (This could prevent near future withdrawals from the bank of Mom and Dad to buy the carpeting or fix the garage!)

This approach can even work if your child is in school.  With the high cost of college room and board, you might come out ahead if you bought a $100,000 condo for 3.5% ($3,599 ) down.  Your child could claim the credit to offset the cost of other school expenses.  As long as they lived in the place for three years, they would not have to pay anything back.  Assuming the kid doesn't change his major to some esoteric specialty only available across the country, this would serve him well during his college years.  He could sell the place when he graduated, and use the proceeds to finance his new home or other life adventure. Or you and your child could become landlords and rent out the place to future students.

Rachel Valentino can help you figure out how to make the tax credit work for you. She is very familiar with the DC metro area, so she can direct you to appropriate and affordable properties in the District, northern Virginia, or eastern Maryland.