To amend a return, the Internal Revenue Service (IRS) requires a taxpayer to submit form 1040X, titled "Amended U.S. Individual Tax Return," and form 5405, titled "First Time Homebuyer Credit and Repayment of the Credit."
To claim this first time home buyer stimulus credit, the homebuyer uses IRS form 5405 to calculate their tax credit and then enters the amount of the credit on their 2009 Form 1040 of their federal income tax return.
The homebuyer applies for the mortgage through a local lender and then the mortgage is backed by the FHA, giving the lender a guarantee that the loan will be repaid by FHA if the borrower defaults on the loan.
As with other loan guarantee programs, the loans are made by banks or mortgage companies but the VA guarantees that the lender is protected against loss if the homebuyer defaults on the loan.
For example, the first-time homebuyer credit which was part of the American Recovery and Reinvestment Act of 2009 required that a homebuyer live in the home for three years.