A new initiative announced Friday will make buying a new home more attractive -- and perhaps easier -- for first-time homebuyers.
Announced by the Federal Housing Administration, the new plan will allow borrowers who are purchasing a home for the very first time to use an $8,000 federal tax credit toward closing costs and part of their down payment -- which is a boon for new homebuyers, since closing costs can amount to thousands of dollars.
Available to borrowers of FHA loans only, borrowers can now tap the $8,000 tax credit -- which was previously only available upon filing one's taxes -- before they complete their taxes. Borrowers, however, will be responsible for a 3.5 percent down payment of their own.
But speeding up access to the rebate is expected to give more consumers the opportunity to purchase homes -- as well as boost the struggling housing market.
"We believe this is a real win for everyone," CNNMoney.com quotes HUD secretary Shaun Donovan. "Families will now be able to apply their anticipated tax credit toward their home purchase right away. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."
If you are looking to buy your first home, check out Cyberhomes' new buyer's guide for new homebuyers -- the guide offers a step by step guide on how to buy your first home and a look at markets where homes are especially affordable for new buyers.
—Lauren Baier Kim