On November 4, 2009, the senate voted to renew the federal tax credit available to first time homebuyers. The credit was instituted to encourage a struggling real estate market to grow, and to help deal with the tumbling property values and declining demand for both new and existing homes following the mortgage crisis in 2007 and 2008.

While the economy is in a better position then it was a year ago, real estate values are still down in many parts of the country. For first time buyers, this may mean it is a great time to buy. Not only will you be able to purchase a home at a lower cost then you could two years ago, but you will also be eligible for a tax credit on that home as well.

The tax credit that was extended will mirror the terms of last years bill. First time home buyers will be entitled to an $8,000 tax credit if they buy a home. The tax credit proposal for 2009 will also add in a $6500 refund for those who buy a new primary residence, thus extending the incentive to others who might not be eligible for existing tax credit from last year.

The plan requires homeowners to sign a contract to purchase a home by April 30 and to move in by June 30. The purchase price limits are high- the home needs to be valued at under $800,000- and the income limits are high as well. If you are single, you can make up to $125,000 annually and still be eligible for the credit. If you are married, you and your spouse can jointly earn $225,000.

For those in a position to buy who can qualify for a loan for building a home, this may be a great opportunity to purchase. If you are considering jumping into the market, look into home loans offered through HUD. If you are eligible, you can also consider a VA mortgage loan or other special government loan program in order to see if you can qualify to buy. Getting a loan through the government, especially at the record low interest rates available in 2009, may compound the savings available to you from the tax credit.

Buying a home is often the greatest thing a person can do to build wealth and establish security. With tax credits and low home loans, it certainly seems as though this is an ideal time to buy.