If the housing bill passes this weekend like expected it could mean big benefits to first time home buyers. 

If you are buying a home for the first time, and it is your primary residence, you are eligible for a federal tax credit of $7500 or 10 percent of the purchase price, whichever is smaller.  With a tax credit, you subtract the credit amount from the total you would otherwise pay to the IRS. So if you  owe $1500 and you qualify for the credit, you would end up getting a $6000 refund.

There are catches though – income limitations and you have to pay back the credit over the next 15 years, in equal amounts each year when you pay your federal taxes.  It is essentially an interest-free loan than a true credit.

Please consult your tax accountant or the IRS for additional information.