There has been some confusion recently by consumers who have been led to believe that they can use the $8,000 first-time home buyer tax credit for their down payment to buy a home.
Home buyers cannot use the $8,000 tax credit for their down payment.
There is a way to use the tax credit to cover closing costs.
The U.S. Department of Housing & Urban Department (HUD) announced May 29, 2009 that FHA-approved lenders may develop bridge-loan products that enable first-time home buyers to use the benefits of the federal $8,000 first-time home buyer tax credit for closing costs.
FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent required by FHA.
The bridge loans can't be used to cover the minimum 3.5 percent down payment.
Home buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly, but would still have to come up with the minimum 3.5 percent down payment.
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