Generally speaking 3.5% is the minimum downpayment for FHA. A few days ago the National Association of Realtors came out with a statement that HUD would allow first time homebuyers to use their tax credit to finance their downpayment. Turns out this announcement was premature and the program has not yet been implemented.

However, if you are a first time homebuyer and you opt to use THDA in conjunction with FHA, THDA can provide a no-interest 2nd mortgage which WILL allow you to use your tax credit for your downpayment. For more information click here: http://www.thda.org/singlefamily/stimulus/stimulus.html