Lisa Barton

As of May 29, 2009, the U.S. Department of Housing and Urban Development (HUD) gave FHA-approved lenders permission to develop programs that will allow first-time home buyers to use the federal tax credit (which can be up to $8,000) to help cover closing costs or to buy down the interest rate on a mortgage. The lenders can also develop programs such as bridge-loans that will allow new buyers to put down a larger down payment on their mortgage. Right now the minimum down payment on an FHA loan is 3.5% of the loan. It’s important to note that these bridge loans cannot be part of the initial 3.5%—first-time buyers have to come up with that money on their own.

Remember, the first-time home buyer tax credit is available to individuals who’ve never owned a home and to those who haven’t owned a home in at least three years. This tax credit does not have to be repaid and is worth up to $8,000 (depending on the purchase price of the house and the buyer’s annual income). For more information go to the National Association of Realtors.