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http://www.ncsha.org/section.cfm/3/34/2920

The Department of Housing and Urban Development (HUD) issued 2 methods by which the $8000.00 could be used at the time of closing.

1. The credit can be used towards additional down payment, beyond the required 3.5%, and closing costs on FHA insured loans. The process requires a lender or third party to put money in hand of the borrower in exchange for a promise of repayment when the borrower receives the tax refund. The refund must go to the borrower, the lender can charge a max of 2% ($160.00), and cannot put a lien on the property. The program has much risk and little reward for lenders, and I am not aware of any participating.

2. To help buyers that need down payment and closing cost assistance when purchasing a home with the tax credit, a number of states housing authorities are offering special short-term second loans to qualified buyers. These loans are available for little or no interest and may be repaid with the homebuyer tax credit refund.

Currently 12 states have programs in place. A good source visit frequently to see if states are participating: http://www.ncsha.org/section.cfm/3/34/2920.

Another option is to look into any local bond programs that provide down payment assistance. When Congress passed the $8000 version of the tax credit, they allowed purchasers to claim the credit even if they utilize state and local bond financing.

Shanel, I am not sure if the law in DC is different, however, here in Ohio, buyers can get an advance on the $8,000 and use part or all as an ADDITIONAL DOWN PAYMENT above and beyond the required 3.5% when financing the purchase with an FHA loan. Please see link to my blog post below, I also have a link to the news release from HUD within the post. Hope this helps!

Hello Shanel. Unfortunately the $8000 home buyer tax credit can not be used as a down payment. HUD originally put out mortgagee letter 2009-15 on May 12th,but was rescinded the next day. Please this blog by Jeff Belonger THE FHA Guy about this more http://activerain.com/blogsview/1094377/-8-000-first-time-ho…

Only 10 states are doing this so far & it is not available yet in DC.

The IRS has excellent easy to understand information they provide to the public.

http://www.irs.gov/newsroom/article/0,,id=187935,00.html

For a discussion on the Topic I think you would find this informative.
http://activerain.com/blogsview/1094377/-8-000-first-time-ho…

Good luck, Dunes

Shanel, HUD clarified their position on the tax credit being used at closing and it was determined that the credit could be used for closing costs only or to buy down the interest rate. However, most states have not adopted procedures to handle this. If you take a quick look at these two posts on my blog it should clear this up for you - http://budurl.com/7u6w.