The Federal Housing Administration today released a plan by which first-time homebuyers can take advantage of the previously announced $8,000 tax credit by obtaining a short-term loan to apply the money to their down payment or closing costs.  As I understand it, homebuyers will still have to produce a 3.5% down payment, prior to applying tax credit dollars.  In other words, the $8,000 can be used as down payment funds above the initial 3.5%, which could allow buyers to secure better interest rates.

The tax credit will be taken against the amount owed with taxpayers’ 2009 tax filing.  However, the new program allows taxpayers to get a loan to access the $8,000 in 2009, prior to completing their tax returns.

For more information, see the HUD press release:  http://www.hud.gov/news/release.cfm?content=pr09-072.cfm.