Qualified first time home buyers will be eligible for a tax credit of up to $8,000 when filing their annual tax return.  On Friday, May 29, 2009, however, HUD Secretary Donovan announced that the tax credit may be immediately available to those buyers.

Currently, borrowers who apply for an FHA-insured mortgage are required to make a minimum down payment of 3.5% when purchasing a home.  The 3.5% is still required, but now lenders can monetize the tax credit to cover closing costs or for an additional down payment.  According to HUD, “this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.”

For more information, see the press release from HUD or view Mortgagee Letter 09-15.