The new FHA down payment assistance plan that was announced by the U.S. Department of Housing and Urban Development (HUD) on May 12, 2009, had a few rules that needed to be finalized.  As of today, HUD has released more details in regards to the plan. 

The biggest change to the plan is how to use the $8,000 first-time home buyer tax credit. Originally, the plan was to use the tax credit as a down payment; however, the 3.5% down payment that is required by the FHA cannot be overridden by the tax credit.  First-time homebuyers may only use the tax credit for additional costs, such as closing costs or to put more money down, only after the 3.5% down payment has been met. The tax credit will be treated as a second lien on the home until such time as the money has been paid back to the bank.