How to use the $8000 tax credit for your down payment.

Most people withhold a certain percentage of their income each pay period in order to pay their federal income taxes at the end of the year. If you plan on purchasing a home before December 1 of this year and you are a first time homebuyer, then you will probably not need that money withheld from your paycheck because you will probably not have any federal income tax liability due to the $8000 tax credit that you will be receiving.



If you start now, you can stop withholding this money and save several thousand dollars that you can use as your down payment on a new house. Here is an example:



Yearly Income: $70,000

Income from today through December 1, 2009: $29,166

Federal Income Tax Withholding Percentage: 15%



Using this example, you can save $4375 ($29,166 X 15%) before December 1 to use as your down payment on your new house. This program would not require you to change your way of living at all in order to save this $4375.



In today's market, you are required to put 3.5% down on a house to get an FHA loan. This means that you would have enough money saved to put 3.5% down on a $125,000 house.



Start this program now because the $8000 tax credit ends when November ends.