How the $8,000 tax credit can be used with FHA loans

Earlier this month the National Association of Realtors reported the $8,000 first-time home buyer tax credit would be an allowable form of downpayment for FHA (Federal Housing Administration) loans. FHA loans have become popular over the last two years because they allow for a low downpayment of 3.5%.

The details of how the tax credit can be used with FHA loans were announced on Friday. The $8,000 tax credit cannot be applied toward the minimum downpayment of 3.5%; however, the credit can be applied to a downpayment amount above and beyond the minimum 3.5%. It can also be used to cover closing costs and buy down the interest rate on the buyer's mortgage.

You'll find more details here.

Dan Miller, Keller Williams Realty and DaneCountyMarket.com