In an unprecendented move, the US Department of Housing and Urban Development announced that the The American Recovery and Reinvestment Act's much-touted $8,000 home buyer tax credit can be used IMMEDIATELY to HELP first-time homebuyers buy a home.

HUD hopes that the plan will stimulate new home sales and help stabilize housing market.

From the press release:

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. [In the past, the law did] not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but...[now]...lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate.

[snip]

Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.

Now, this is month-old news, but many home buyers who are on the fence still haven't heard the good news. Remember--the tax credit is NOT LIMITED to first-time buyers. If you haven't owned a home for at least the last three years, you are probably eligible for the credit.