Even better, you can get money back, like other stimulus refunds, even if you have little or no withholding taxes. If you have a federal income tax liability this will go to offset it as well! As a first-time buyer, it is in your best interest to investigate a loan approved by the Federal Housing Administration (FHA). Traditionally, FHA loans require the lowest down payment of any on the market, which can be as low as 3.5 percent of the buying price. I strongly suggest you to visit Leave The Key Homebuyers to learn more about this.
Here is a tip on how to use the tax credit for homebuyers to help pay all or part of the down payment of 3.5%.In order to be sure that you qualify for the tax credit, talk to your tax professional. If so, then ask them to reduce your employer’s income tax withholdings, up to the amount of your expected credit. This would make it possible for you to have less taxes taken out of your pay check, giving you more home pay in each check. This is your money, and can be used to meet your down payment requirement of 3.5 percent.
Be sure to put aside the additional take home pay for use only as your down payment! If you have changed your income tax withholding and then do not follow through with the home purchase, you will be responsible for repaying any income tax owed to the IRS, possibly with interest and penalties. Be careful. Also, after you have received your tax credit, do not forget to change your withholdings back to where you had them. Some kind of conventional financing would be the alternative to an FHA loan. In this case, the changes to the rule that appeared in part of the legislation on economic stimulus have allowed some state agencies to introduce housing finance programmes that offer second mortgage loans in the short term that can be used to finance down payments.