Great news for first time home buyers released today!  The Federal Housing Administration (FHA) will allow home buyers to apply the Obama Administration’s new $8000 first-time home buyer tax credit towards the purchase costs of a FHA-insured home.

Prior to this the tax credit was only accessible to buyer’s after filing their tax returns with the IRS.  Now, home buyer’s using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5% of appraised value or their closings costs, which can help achieve a lower interest rate.

What this doesn’t allow you to do is use the $8000 towards the minimum 3.5% down required for an FHA-insured mortgage.

According to the National Association of Home Builders, the Administration’s homebuyer tax credit will stimulate 160,000 home sales acroos the nation – 101,000 of which will be first-time home buyers who will receive the credit.  59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home.