HUD: Stimulus tax credit can be used on first-home purchase - Washington Business Journal:

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Under the American Recovery and Reinvestment Actof 2009, first-timwe homebuyers can qualify for the tax creditr for purchasing their first home after filint their taxes. But under a new prograjm announced Friday, state housint finance agencies and nonprofit groups can advanc e money to homebuyers up to the full amount of theirf tax credit so the money can be used on a home either to pay closing costs or to add to adown "Home buyers using FHA-approved lenders can apply the tax creditf to their down payment in exces of 3.5 percent of appraised valur or their closing which can help achiev e a lower interest rate," a HUD announcement said.
"Familiess will now be able to apply their anticipated tax credit toward theird home purchaseright away," Donovan said in the "At the same time we are puttinb safeguards in place to ensure that consumers will be protected from unscrupuloue lenders. What we're doing today will not only help these familiea to purchase their first home but will present an enormouds benefit for communities strugglin g to deal with an oversuppluyof housing." The stimulus tax credit can be claimec on a taxpayer's 2009 or through an amended 2008 return. FHA will still requiree that homebuyers paya 3.5 perceny down payment.
HUD cited National Association of Home Builders data showinh thatthe first-time homebuyer tax credit will stimulatse 160,000 home sales acrosz the nation, with 101,000 of those sales beingg to first-time buyers and 59,000 to existing homeowners who be able to sell theid home to a first-time buyer. .