The Department of Housing and Urban Development (HUD) said on Friday a new $8,000 tax credit has been provided by the Federal Housing Administration for first-time homebuyers purchasing FHA-insured homes via short-term loans. The plan would likely fuel 160,000 home sales across the US.

The tax credit is applicable under the Obama administration's $787 billion federal stimulus program, the American Recovery and Reinvestment Act of 2009, and first-time homebuyers can become eligible for it after filing their taxes. However, an insight into the detailed rules reveals that the FHA has yet another condition for eligibility - that of necessitating home buyers to provide at least a 3.5 percent down-payment from other sources.

The plan allows state housing finance agencies and nonprofit groups to advance money to homebuyers even for the full amount of their tax credit, in order that the money can to towards the projected home purchase - either for payment of closing costs or for additions to a down payment.

In a statement about the new program, HUD Secretary Shaun Donovan said that it endeavors to "monetize" the tax credit up-front for a quicker stabilization of the housing market. Donovan added: "What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."