1. New Tax Credits

To encourage consumers to shop for a home, federal and state governments are giving away free money.

The federal First-Time Home Buyer Tax Credit gives a maximum of $8,000 to those who haven’t owned a home in the past three years. To qualify for the credit, you must buy a primary residence through the end of November. (Click here for first-time mistakes home buyers make.)

On the state level, some states are offering additional tax credits that home buyers can combine with the federal credit, says Errol Samuelson, president of Realtor.com, a real estate listing site. California offers a tax credit of $10,000, or 5% of the purchase price, whichever is less, for sales that close through March 1, 2010. In Texas, residents can claim a mortgage interest tax credit of up to $2,000. And Ohio is offering a loan for the down payment and closing costs of up to 3% of the home’s purchase price.

Click here for more on the First-Time Home Buyer Tax Credit.

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