as I understand it from the mortgage brokers I work with, the $8000 can be used for closing costs, but NOT the 3.5% downpayment.

With an FHA loan you can use the credit for down payment in ADDITION to the required 3.5% but this isonly being done in 10 states so far.

Greetings B,
I do believe that the only way you will be able to use the tax credit as a down payment is if you changed your deductions and collected those funds up front.

Supposedly there was to be bridge loans that allowed the consumer to use those funds as down payment or toward closing costs.

To date those kinks have not worked themselves out. So you may be able to but just not as of yet.