Cut and paste from my previous answer on another thread :)
Per the IRS website:
First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:
-Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
-Applies only to homes used as a taxpayer's principal residence.
-Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
-Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
Furthermore, HUD has issued guidance so that this credit may be used in addition to the 3.5% down payment requirement on an FHA loan. Lenders have yet to implement these guidelines. Regardless good news if you are looking to be a first time buyer :)
**Keyword here is ELIGIBLE consult with your tax professional to see if you qualify for the credit.