The economic stimulus bill passed in February allows first-time homebuyers a tax credit equal to 10 percent of the home's purchase price or $8,000, whichever is less, when they file their federal income taxes.
The Federal Housing Administration announced that first-time home buyers can use the $8,000 tax credit sooner rather than later, as long as they’re using an FHA-insured mortgage and can come up with a down payment of 3.5% (before help from the tax credit). Home buyers can use the credit to either plump up their down payment, or for closing costs, instead of waiting to see the money until after they do their taxes next year.
Lenders who are offering tax-credit can not charge excessive fees (more than 2.5 percent) for the service.
The tax credit applies to home purchases that close before Dec. 1.
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