In an effort to spur home sales, the Federal government is offering a tax credit of $8,000 to all First-Time Homebuyers who purchase a house before November 30, 2009.  To qualify for the tax credit, a First-Time Homebuyer is defined as anyone who has not owned a home in the past three years.

 

One great thing about this program is that it is pretty straightforward.  The $8,000 is a true tax credit and does not have to be repaid.  If you have $1,000 coming back on your 2009 federal taxes, you would instead get $9,000 back—your original $1,000 plus the $8,000 tax credit.  According to the IRS, this credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

 

Additionally, the US Department of Housing and Urban Development has now given FHA-approved lenders the go-ahead to develop loan products that allow buyers to immediately borrow the $8,000 to help cover closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent down payment required for an FHA loan.  Unfortunately, these bridge loans cannot be used to cover the minimum 3.5 percent down payment.