Tax credit ineligible for FHA down payment
HUD Officials pulled the Mortgagee Letter authorizing the use an up to $8,000 First Time Home Buyer's Tax Credit as downpayment for FHA Loans.
Information is currently limited, but sources indicate that the IRS officials shot down HUD's plan stating that using bridge loans as the FHA downpayment, pending actual reciept of the tax credit, could create income tax issues.
The First Time Home Buyer's tax credit is still available, but must be claimed after the purchase of a home. Click here for more information on the tax credit