FHA offers a set of programs through HUD (Housing and Urban Development). The most recent changes were made October 1 as a part of the HOUSING AND ECONOMIC RECOVERY ACT OF 2008.

The HOUSING AND ECONOMIC RECOVERY ACT OF 2008 eliminated down payment assistance paid by the seller so now the buyers must arrange for their own down payment. Typically this is 3% of the sales price (set to escalate per the HOUSING AND ECONOMIC RECOVERY ACT) to 3.5% after January 2009.

Good news included in the HOUSING AND ECONOMIC RECOVERY ACT OF 2008 is a tax credit. Without representing any tax or accounting law (always check with a professional) the Act allows for up to a $7500 tax credit for a couple buying in 2008 and for part of 2009. If purchased in 2009 it appears the credit is able to be applied  retroactively to a 2008 tax return! The law allows for a credit of half that for a single person.

The TAX CREDIT as dictated by the Act is for people who have not owned a residence in the past 3 years. The Housing and Economic Recovery Act also is intended to help the recovery by the tax credit meaning that even if a person or couple does not owe tax they will actuyally RECEIVE A CHECK for up to $7500.

Again, this is a tax credit not a deduction to reduce taxable income. A major plus and hopefully a stimulus that may make that part of the HOUSING AND RECOVERY ACT OF 2008 successful (whereas other parts, specifically the HOPE FOR HOMEOWNERS section was a total dud. See my posting as to that topic.

NOW UNDERSTAND THIS IMPORTANT ASPECT OF THE TAX CREDIT; The Housing and Economic Recovery Act of 2008 specifies that the tax credit is to be re-paid to the IRS at ZERO INTEREST over a 15 year period. So, in my opinion anyway, it is a 'no-brainer' and I have yet to have a client say they won't jump all over it.

As with any topic, call or e mail me and I will be happy to answer any specific questions you may have. If i don't know the answer I will make every attempt to find the answer.