Most first time home buyers are aware that the Federal Government is providing an $8,000 tax incentive to qualifying first time home buyers. Currently the IRS is allowing the $8,000 tax credit to be claimed on 2008 taxes is a purchaser has not owned a home in the last 3 years and meets certain income requirements. Home buyers are even allowed to file an amendment to their 2008 tax filing if they purchase a home in the 2009 tax year. This is a wonderful opportunity for first time home buyers, however, it is about to get even better as the Washington State Association of Realtors® have been working on a down payment assistance plan that would work in conjunction with the tax credit.

The Washington State Association of Realtors® have been working on getting a new bill signed where the same qualifying first time buyers will be able to use this $8,000 credit towards their down payment. This will have an immediate impact on the first time home buyer market. An $8,000 down payment would give a first time home buyer more than 3.5% equity in a $200,000 home. One has to assume that FHA would allow the $8,000 to be used as a down payment, which would mean that a first time home buyer could purchase a home on an FHA loan without a down payment and have instant equity in a home.

This new down payment assistance plan was created by the Washington State Association of Realtors® and has already been passed by the State. At this point the bill just needs to be signed off by the IRS to be put into motion. It is likely that this will be passed within the next 30 days or less.

If you are a first time home buyer, this is absolutely great news. You will soon have the option to take the $8,000 credit on your taxes and spent the money on home improvements, or use the credit as a down payment on your first home. What an exciting time to be a first time home buyer!