Some "Real World Examples"

What if I purchase later this year but can't get to the settlement before December 1?
The credit is available for purchases before Dec. 1, 2009. A home is considered as "purchased" when all events have occurred that transfer the title from the seller to the new purchase. Thus, closings must occur prior to December 1 to be eligible for the credit.

I haven't even filed my 2008 tax return yet. If I buy in 2009, do I have to wait until next year to get the benefit of the credit?
You will have a helpful choice that might speed up the process. Eligible homebuyers who make their purchase between January 1 and December 1, 2009 can treat the purchase as if if had occured on December 31, 2008. Thus, they can claim the credit on their 2008 tax treturn that is due on April 15, 2009. You have three options:
1. If you buy between January 1 and April 15, you can claim the credit on the 2008 return due April 15.
2. You can extend the 2008 income-tax filing as late as October 15, 2009. IRS automatically grants extensions, but you must file!
3. If you've file your 2008 return before the purchase of a home, you can file an amended 2008 tax return on Form 1040X.
Of course, 2009 purchasers will always have the option of claiming the credit for the 2009 purchase on their 2009 return (due April 15, 2010).

I know there is no repayment requirement for the $8,000 credit. Will I ever have to repay any of the credit back to the government?
One situation does require a recapture payment back to the government,. If you claim the credit but then sell the property within 3 years of the date of purchase, you are required to pay back the full amount of any credit, including any refund you received from it. A few exceptions apply.

Question and Answers

How do I apply for credit?
There is no pre-purchase authorization, application or similar approval process. All eligible purchasers simply claim the credit on their IRS Form 1040 tax return. The credit will be reflected on a new Form 5405 that will be attached to the 1040. Form 5405 can be found at www.irs.gov

So, I can't use the credit amount as part of my downpayment?
No. Congress tried hard to devise a mechanism that would make the funds available for closing costs, but found that pre-funding would require cumbersome processes that would, in effect, bring the IRS into the purchase and settlement phase of the process.

So there's no way to get any cash flow benefits before I file my tax return?
Yes, there is. Any first-time homebuyers who believe they are eligible for all or part of the credit may modify their income tax withholding (through their employers) or adjust their quarterly estimated tax payments.

Good Articles to Read Regarding Homeowner Stimulus Package

The Homeowner Affordability and Stability Plan is part of the President's broad, comprehensive strategy to get the economomy back on track. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. To read more about the Homeowner Stimulus Plan read the following articles:
http://whitehouse.gov blog - Hope for Homeowners
http://WashingtonPost.com: Homeowner Affordability and Stability Plan on 02.08.2009
http://www.federalhousingtaxcredit.com