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

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Under the American Recovery and Reinvestmentr Actof 2009, first-time homebuyers can qualify for the tax credit for purchasintg their first home after filinv their taxes. But under a new program announced Friday, state housing finance agencies and nonprofi groups can advance money to homebuyerzs up to the full amount of theit tax credit so the money can be used on a home either to pay closing cost s or to add to adown "Home buyers using FHA-approverd lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised valuwe or their closing costs, which can help achieve a lowedr interest rate," a HUD announcement said.
"Families will now be able to apply their anticipated tax credit toward their home purchasrright away," Donovan said in the announcement. "A t the same time we are puttiny safeguards in place to ensure that consumers will be protecterd fromunscrupulous lenders. What we'rew doing today will not only help these families to purchase their first home but will presenrt an enormous benefit for communitiea struggling to deal with an oversupplhof housing." The stimulus tax credit can be claimec on a taxpayer's 2009 return, or through an amendesd 2008 return. FHA will stilk require that homebuyers paya 3.5 percenft down payment.
HUD cited Nationaol Association of Home Builders data showing thatthe first-times homebuyer tax credit will stimulate 160,000 home salea across the nation, with 101,000 of those salea being to first-time buyers and 59,000 to existin g homeowners who be able to sell theit home to a first-time .