First-Time Home Buyers: Use $8k Tax Credit For Down Payments Or Closing Costs?

BusinessWeek has an interesting article about a little known program that will allow first-time home buyers (technically, those who have not owned a home in three years) to use the 8k tax credit to offset down payments or closing costs.

From BusinessWeek:

Buyers who haven’t owned a home for three years or longer are eligible for an $8,000 tax credit, thanks to a provision in this winter’s stimulus package. Now, under a little-noticed program announced May 29, the Federal Housing Administration will steer the funds to cover closing costs directly-in some cases even offsetting the 3.5% minimum down payment FHA loans require. That’s enough to cover most or all of the down payment and fees for homes up to the U.S. median price, now about $169,000.

Of course, some think that the “no money down” lifestyle contributed to the housing bubble, and point out that buyers who receive down payment assistance default at a higher rate than those who don’t need it.

Will you take advantage of this program?

FHA Loans: Return to 0% Down [BusinessWeek]