$8000 dollars first time home buyers grants are now available through President Obama's 2009 Housing Stimulus Package. Similarly, do not worry too much about the FHA mortgage loan requirements for home buyers with bad credit for the moment. The package is intended to help more Americans start buying and saving their own houses through a variety of tax credits, down payment grants and mortgage loan modifications etc. Whether you are first time house buyers or not, this is a good time to understand how you can take advantage of these free government grant money which you do not need to repay back as long as you satisfy certain conditions.

Firstly, let’s understand the definition of a first time home buyer that will be eligible for that additional $8000 tax credit. An unmarried individual that is not named as the primary owner of a house within the United States for the past three years and longer will be eligible to receive the first time home buyer tax credits. For married couples, the above condition must apply to both partners at the same time. Notice the misleading term for this tax break for first time home buyers.

If you have not read this article, you would have thought that you are no longer eligible for this government housing grant when you have previously owned but have since sold off your house more than 3 years above. By the way, it should be obvious that these US government grant money are only intended for legal US citizens above 18 years of age.

Like all other grant money from the 2009 Housing Stimulus Package, this $8000 first time home buyer assistance is meant for people that do need that extra bit of help to start owning a house of their own and stop wasting money paying rent to make their landlord richer. Therefore, there is a maximum annual income cap of $75000 dollars which is reasonable since you ought to be able to afford both the down payment and monthly installments for your house of choice without any further help from the first time home owner’s grant. As for married couples, the combined income must be less than $150000 dollars in order to apply for the housing tax credit grant.

The house under consideration must be bought solely for the intention of personal accommodation. If you are going to buy it for rental purposes to other tenants, you will be excluded from this first time home buyer program. If the house is gotten as a gift or as part of inheritance, you will not be entitled to the $8000 tax break for first time home buyers. Similarly, houses that are purchased from relatives will not be allowed in the homeownership assistance program.

Note that although we mentioned a few times that you can get the $8000 tax credit for 1st time home buyers; this is for home purchases between January 1, 2009 till December 1, 2009. If you have bought your first house in the past three years between April 1, 2008 till December 31, 2009, you can still get a $7500 credit for first time home buyers. Yes, that means you do not need to shake your head and think you missed out on free government tax credits because you have already bought your first house few months ago before coming across the news regarding 1st time home buyer programs.

FHA Mortgage Loan Requirements

Now, for first time home buyers with poor credit, it can be more difficult to get a sub-prime mortgage at this time and enjoy the free government grant assistance. Most bad credit and sub-prime mortgage lenders have gone bust and are no longer in business while banks and other established home loan lenders have really tightened up their controls on borrowers' credit worthiness. If you think only the private lenders are affected, you are wrong. It is also difficult for a first time home buyer with bad credit to even apply for an FHA home loan. Due to the sub prime crisis, it is commonly acknowledged that FHA loan requirements now include credit scores that are given some weightage when approving FHA mortgage loans for home buyers with bad credit. That means first time house buyers also need at least a FICO score of 620 whether you are considering FHA vs Conventional home loans.

First Time Home Buyers With Bad Credit

To take advantage of the government 2009 home stimulus package and get that $8000 dollars first time home buyer tax credit grant, first time home buyers with bad credit need to quickly engage in some instant credit repair measures if you are currently fall under the so called bad credit borrowers category. This may not be as difficult as you think and most 1st time home buyers will be able to remedy and turn around the situation by themselves doing a DIY credit restoration or engage a professional credit repair firm for help.

Another alternative is to approach a house seller that is willing to hold the mortgage until you are able to improve your FICO credit scores and subsequently do a mortgage refinance with a proper lender. This will allow you to be in time for the first time house buyer tax grant before the deadline closes this year.

Even though the $8000 dollars tax credit is a nice gift from the government, the increased mortgage interest fees for first time home buyers may actually negate the overall benefit and make owning a house right now costs more expensive compared to buying after one's credit scores are restored to ideal levels. What we are trying to say is that, unless you already have plans to get married within the year and buy your own house, these first time home buyers grants should not form the main motivation to become house owners especially when your income levels may not be comfortably high enough to service the subsequent monthly mortgage installments for the next 20 or 30 years. However, if you can afford to buy and are currently renting an apartment or house, it makes sense to stop wasting money on rentals unless you have a good reason.

You are eligible for the $8000 tax credit grant as long as you are prepared to pay for the higher mortgage interest rates. Do plan your budget and expenditures properly and select a house that is within your affordability means, especially if you still have a large debt to repay such as high interest credit card debts. If everything is alright, then you can apply by contacting the FHA (Federal Housing Administration) or HUD (US Federal Housing & Urban Development Department) after you have confirmed you do meet the FHA mortgage loan requirements for the $8000 first time home buyers grants with bad credit.