The Economic Stimulus Bill signed by President Obama offers first-time homebuyers a tax credit equal to 10% of the cost of their home up to $8,000. This tax credit is available to first-time homebuyers who purchase a home in the United States as their principal residence on or after January 1, 2009, and on or before November 30, 2009.

Just announced on May 29, 2009, HUD will allow buyers to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 income taxes to receive a refund. These funds may be used to pay closing costs and downpayment costs above the 3.5% downpayment that is required for FHA-insured homes.

To quality as a first-time homebuyer, you cannot have owned an interest in a principal residence in the past three years from the date of the qualifying purchase.

To quality for the full amount of the tax credit, you must earn no more than $75,000 if filing as Single or Head of Household. If filing a joint return, the buyers may have a combined income of no more than $150,000. There is a phase out of the credit if reported income is more than $75,000.

The tax credit must be taken as a credit from your total tax liability for the 2008 or 2009 tax year. Also, the tax credit is “refundable,” meaning that the taxpayer can receive a tax refund if the credit is greater than the estimated liability.

This credit does NOT have to be repaid, making the tax credit a fantastic opportunity that anyone considering becoming a first-time homebuyer cannot afford to miss.