There is something for just about everyone in the economic stimulus bill recently signed by the President, and that includes first-time home buyers.

The $8,000 tax credit that is available until December 1 on the purchase of a first home is hitting the market at a favorable time. Mortgage interest rates are near record lows, and housing prices have eased. As a result, housing affordability has greatly improved, and people are looking at a golden opportunity to enjoy the benefits of homeownership. The tax credit does not have to be repaid, and there are ways of applying it to a downpayment.

Until last month, this credit had to be claimed on the buyers' 2009 income tax return.  However, now, the credit can be claimed early and used as downpayment funds!

The U.S. Department of Housing and Urban Development announced in May that the Federal Housing Administration will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds for upfront costs for the purchase of homes with FHA-insured mortgage loans.

“This is great news for thousands of families who want to take advantage of today’s low interest rates, competitive prices, great selection and the federal tax credit that is only available until Nov. 30, but could not save enough money for a downpayment and closing costs,” said NAHB Chairman Joe Robson.

HUD announced that FHA-approved lenders can purchase the tax credit from the home buyer in advance, so that the home buyer can use the funds for closing costs or make a downpayment in addition to the 3.5% minimum. Home buyers who go directly to FHA-approved lenders still need to come up with the 3.5% minimum downpayment that is required for an FHA-insured loan.

Information on the first-time home buyer tax credit can be found at www.federalhousingtaxcredit.com.  The National Association of Home Builders has its own You Tube channel, and tax credit information is available there too.  For anyone who has been considering the prospect of buying a first home, now is definitely the time to buy!