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The housing market has taken about as big a beating as it can. The bailout the government is rolling out to save banks from bad mortgage securities is stunning, but not the only piece of legislation designed to help the housing market.

First time home buyers are critical to real estate markets. It is a step process. Homeowners continually buy and sell to move up from one property to the next. This is how they end up with bigger homes and fuel the market.

Take first time homebuyers out of the system and things get ugly quickly. The homeowners above this level suddenly have nobody to buy their homes. If they cannot sell, they are not buying and the entire market starts to fall apart.

The current market is bereft of first time buyers. Without these buyers, the market is stagnating. While there are all kinds of finance problems contributing to this, the government has acted to motivate first time buyers to get back into the market.

When the government wants to get serious, it can really do some amazing things. It is desperate now. How desperate? It is now offering first time homebuyers a tax credit in the amount of $7,500. This a huge figure if you understand tax credits.

Stop whining about tax deductions disappearing. Yes, they are valuable, but not like a tax credit. Tax deductions reduce your income and then taxes are figured based on the reduced amount. Tax credits reduce your taxes directly dollar for dollar.

Taxes can be mind numbing, so consider an example. I have a tax credit of $6,000. My accountant does my taxes and tells me I owe the IRS $3,000. Will I be writing the agency a check? Nope. When my tax credit is applied, they will be writing me a check for $3,000.

It may see dangerous to ask the IRS for more than I actually owe. In general, it is a bad strategy, but not here. This is a fully refundable tax credit, which means it does not matter what I owe. The IRS will be writing checks a lot.

When there is a big carrot, there is often a line tied to it. Sadly, this is the case here. The government is not giving away a freebie. You have to pay back the credit. You have 15 years to do it, which means about $40 bucks a month.

Can anyone claim the credit? No. It is limited by the amount of money you make. If you are married and making more than $170,000, you are ineligible. Other taxpayers making more than 75K need to talk to an accountant to get an answer.

Everyone gripes about the loss of tax deductions, but they miss the points. Tax credits are the real golden egg for taxpayers. Claim as many as you can. If you are considering buying a home, this one should help a bunch.