Don't get too excited about the $8000 buyer credit....

The Federal Housing Administration rolled out details of its policy Friday that will let first-time home buyers apply an $8,000 tax credit to fund home purchases.

Until now, home buyers were only able to get that money after they bought a home, by applying for the credit-10% of the home's price up to $8,000-on their tax returns.

The policy change means home buyers, who use FHA-backed financing, can get a short-term loan to help buy a home. The loan is repaid a few months later, after the buyer files an amended tax return and receives the credit.

A few important notes:

· This is only for FHA loans, which require a minimum 3.5% down payment.

· Borrowers must first come up with the minimum 3.5% themselves. The bridge loan would cover a larger down payment.

· Borrowers can still use loans from certain non-profits and state and local housing finance agencies to fund the 3.5% down payment.

A handful of states, including Colorado, New Jersey and Ohio, have already launched programs providing bridge loans that allow home buyers to ‘monetize the tax credit,' which expires Dec. 1. And Realtors and homebuilders have pushed hard for the agency to do the same. But the industry could be disappointed by the plan, announced at a builder conference Friday by HUD Secretary Shaun Donovan, because they wanted to allow buyers to use the credit to fund the initial 3.5% down-payment. The FHA's policy makes sure that buyers still have "skin in the game" by funding their initial down payment, even if they use tax credit to fund closing costs and a larger down payment.

Note the text highlighted in red. Like all the programs recently announced to help either distressed homeowners (Making Home Affordable, Fannie Mae DU refi plus, Freddie Mac Refinance Relief program) this one is also going to be a constantly changing landscape as the government, and lenders, assess and reassess the parameters of this program.