Feds reverse rule to assist first-time home buyers - Tax credit ineligible for down payment

Federal officials on Monday May 18, 2009 reversed an earlier decision to allow first-time home buyers to use an $8,000 tax credit to borrow the down payment on a home.

A week earlier, U.S. Department of Housing and Urban Development Secretary Shaun Donovan had told the National Association of Home Builders that HUD would let banks and local governments offer short-term "bridge loans" to cover the down payment for first-time buyers eligible for the tax credit. The loans would have been available to applicants for federally insured mortgages such as Federal Housing Administration loans.Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers. The loans also could have created income-tax issues, according to the IRS officials who shot down HUD's plan.

If you do buy a home this year by Nov, 30 2009 you will be eligible up to $8,000.00 tax credit. Please go to the following link to see all the eligibility requirements.

http://www.irs.gov/newsroom/article/0,,id=206293,00.html