Delete This Page

Are you sure you want to delete this page? Once you delete this page it cannot be retrieved.

Publish This Page

Are you sure you want to publish this page? Once you publish this page it will appear on the site.

About First-Time Home Buyer Tax Credit

If you are buying a home this year, it's important to know whether you qualify for the $8,000 tax credit for first-time home buyers.


Qualifications for $8,000 tax credit:
  • Must purchase a home (close and receive title) on or after January 1, 2009 and before December 1, 2009.
  • Must be a first-time home buyer, which means you cannot have owned a home -- and used it as your primary residence -- for the past three years prior to purchase.
  • Home you purchase must be used as a primary residence. The home cannot be used as a vacation home or rental property.
  • Cannot purchase a home from a close relative such as your spouse, parent, grandparent, child or grandchild.
  • Must make less than $75,000 for a single taxpayer or less than $150,000, if filing jointly. 

About the $8,000 tax credit:

  • Use as downpayment or closing costs -- Initially, the tax credit was designed as a refundable credit on buyers' tax return next year -- either up to $8,000 or 10% -- whichever came first. Now, a new HUD initiative allows qualifying first-time home buyers to receive these funds upfront to be used as a down payment or money towards closing, as announced by U.S. Housing and Urban Development Secretary Shaun Donovan. This has been referred to as a bridge loan.
  • FHA-approved lenders, only -- At this time, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit. Home buyers using FHA-approved lenders can apply the tax credit to their down payment.
  • Home buyers must pay the 3.5 percent -- While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA's required 3.5% down payment on their own.
For more information on the $8000 tax credit, review these Q&A's from the IRS.

See more Q&A on the First-time Home Buyer Tax Credit in Zillow Advice

By Diane Tuman.
SAVECANCEL Saving changes
Contributors to this article include: