Buying a home seems like a scary step, especially in light of the mortgage meltdown that contributed to the recession. But the Federal Housing Administration is hoping to encourage first-time buyers to take the plunge with an $8,000 tax credit, available through Nov. 30.

Buying a home seems like a scary step, especially in light of the mortgage meltdown that contributed to the recession. But the Federal Housing Administration is hoping to encourage first-time buyers to take the plunge with an $8,000 tax credit, available through Nov. 30.

Yes, the government wants to give you free money for buying a house.

Last year, a similar program offered loans up to $7,500 for first-time buyers, but since February the FHA has been offering $8,000 with no strings attached.

The legislation has stimulated the housing market - at least for homes listed under $250,000, said Gary Parsons, president of the Columbus Board of Realtors.

"We've seen many homes get multiple offers on them," Parsons said.

He'd like to see the government extend its offer to all homebuyers in order to mobilize the more expensive housing markets, but for now, it's limited to first-timers.

Here's how it works:

Who is eligible?

The American Recovery and Reinvestment Act defines a first-time homebuyer as someone who has not owned a principle residence in the past three years.

The credit isn't available if your spouse owned a home during that time, if you make more than $75,000 a year or if you and your spouse make more than $150,000 combined annually.

The tax credit is only available for purchasing a primary residence, so it won't come through if you're buying a property with the intention of renting it out or getting a place for your mother-in-law.

How do you get the money?

The tax credit will be subtracted from your 2009 federal tax returns and funneled into your refund check. You can also amend your 2008 tax return to get the money sooner.

Can you use the money toward your down payment?

The FHA perplexed lenders and Realtors last month by announcing that first-time buyers would be allowed to use their $8,000 tax credits as part of the 3.5 percent down payment FHA loans require.

"I don't think you're really going to see that happen," said Marianne Collins, senior VP of mortgage lending for Insight Bank.

Collins thinks the FHA spoke too soon. Lenders will allow FHA homebuyers to use the tax credit money to put down more than that minimum 3.5 percent, or to cover closing costs. But allowing buyers to use tax credit money for the bulk of the down payment would be irresponsible, she said.

The only way buyers could use the tax credit toward their down payment is by taking out a temporary second mortgage from the Ohio Housing Finance Association to cover the down payment.

"If they're using OHFA financing, they can borrow up to 3 percent on a second mortgage," Collins explained. That mortgage would have no interest until July 2010 and no payment until August 2010, so a borrower could pay it off when they get their tax credit money.