Real Estate Investing:More incentives to first-time buyers: Federal tax credit can be used as a down payment

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First-time homebuyers are extremely important to the health of the country’s economy. That’s because they’re also extremely important to the health of the U.S. housing market.

The National Association of Realtors reported that first-time buyers accounted for almost half of all the housing sales conducted in the first quarter of the year. Keeping first-time buyers in the market, then, would seem to be a recipe for recovery for the still-struggling residential real estate market.

Remember earlier this year? That’s when Congress passed the first-time home buyer ,000 federal tax credit. This was supposed to stir all those first-time buyers who were sitting on the fence into action. And it did encourage many first-timers to make the leap toward homeownership.

Now the federal government is making that federal tax credit even more attractive. According to several news reports, including one from the National Association of Realtors, the federal government will soon allow first-time buyers to use the ,000 tax credit for a down payment on the purchase of a home.

This will be a great benefit to first-time buyers. Mortgage interest rates are already at record lows. Housing prices have fallen. Sellers are desperate to make a deal. Everything right now favors buyers.

But there’s still one challenge for first-time buyers. It’s difficult to come up with all the cash needed for a down payment. Many first-time buyers, who are usually young, don’t have a lot of disposable income. Scrapping together the money for a down payment is a daunting task.

By making the ,000 tax credit available for down payments, though, changes this. Once this happens, there’ll be no reason for first-time buyers not to enter the market.

And that can only be good for the nation’s housing industry.

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