Its official, the $8000 First Time Home Buyer Tax Credit can be applied towards the down payment.

The American Recovery and Reinvestment Act of 2009 offers home buyers a tax credit of up to $8000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's, (May 29, 2009,) announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so borrowers can immediately apply the funds toward their down payment. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 % of appraised value of their closing costs, which can help achieve a lower interest rate. Visit HUD'a website to read the FHA's new mortgagee letter:

http://portal.hud.gov/portal/page?_pageid=153,8026931&_dad=portal&_schema=PORTAL

Sandy Mitchell, The Kelly Group, Keller Williams

503-502-6408 or sandy@thekellygroup.net