As part of the Economic Stimulus Package approved by Congress, there is now

an $8,000 Federal Income Tax Credit available to  "First Time Home Buyers".

The $8,000 is a true tax credit and does not have to be repaid, unlike a prior $7,500 credit that called for it to be repaid $500 a year over 15 years, which basically means its was a no interest loan.

Who Qualifies? To qualify for the $8,000 credit, you must earn less than $150,000 in adjusted gross income for couples filing jointly or under $75,000 if filing single. It must be your primary residence and not an investment property and you must stay in the home for 3 years or you may have to pay back some of the credit.  The $8,000 credit is good only for homes purchased by first time home buyers or anyone who hasn’t owned a home in the last 3 years and your escrow must close between Jan 1, 2009 and November 30, 2009.

The State of California is also offering a tax credit to buyers of New Construction.  The credit is
$10,000 applied over 3 years.  However this fund only has $100 million and is running out quickly.