First time home buyers purchasing any kind of home – new or resale- are eligible for the tax credit provided in The Housing and Economic Recovery Act of 2008. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase.  Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, as well as attached townhouses and condominiums.

 

An important consideration is that the tax credit must be repaid to the government, without interest, over 15 years or when the home is sold. Because the tax credit must be repaid, it operates like a zero-interest loan, saving home buyers over $8100 in interest payments, assuming $7,500 financed through a 30-year mortgage with a 7% interest rate.

 

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Information taken from http://www.federalhousingtaxcredit.com