Buying a home requires balancing financial obligations, paperwork and the inspections that are often required to obtain a mortgage to finance the purchase. The U.S. government offers a first time home buyer credit as a way to encourage and assist home buyers purchasing their first home, or those who have been out of the housing market for an extended period of time.http://www.youtube.com/watch?v=5EQ000Fuvk8 

First time home buyer credits are distributed through a deduction on income taxes. The amount of credit offered varies based on the purchase date of the home. Some credits are given without any repayment obligations, while some of the credits act as a loan that must be repaid through tax filings over subsequent years. The specific offer and regulations have changed based on legislation over the years, so be sure to review the current guidelines that affect your home purchase.http://www.irs.gov/newsroom/article/0,,id=206293,00.html 

If you entered into a home purchase contract before April 30, 2010 and closed on the home before June 30, 2010, you may qualify for up to an $8,000 tax credit. Even if you are not a first-time home buyer, you may still be eligible for a deduction. As long as you have not purchased another home within the past three years, you may be able to receive a $6,500 credit.http://www.youtube.com/watch?v=5EQ000Fuvk8 

Homes purchased in 2008 or 2009 used different guidelines and credit terms. If you are filing back taxes, be sure to review the applicable tax policy for first time home buyer credits for those years.http://www.irs.gov/newsroom/article/0,,id=206293,00.html 

The home buyer credit is valid only for new home buyers or individuals who have not purchased or owned a home in the prior three years. Taxpayers buying a new home to replace another residence which they owned and used for at least five out of the past eight years may also receive a credit.http://www.irs.gov/newsroom/article/0,,id=206291,00.html 

The credit is valid for adult residents or U.S. citizens who purchase a house, condo, duplex, mobile home, or other dwelling that will be used as their primary residence. In general, RVs and vacation homes do not qualify for the credit, unless they are considered the taxpayer's principal residence.http://www.irs.gov/newsroom/article/0,,id=206291,00.html  

Determine the amount of credit for which you qualify by competing Form 5405.http://www.youtube.com/watch?v=5EQ000Fuvk8  In general, you will be eligible for up to $8,000, or 10 percent of the purchase price of your new home purchased during the credit window in 2010. The credit amount is income-related with higher-level income taxpayers receiving less credit than taxpayers with lower adjusted gross income totals.http://www.irs.gov/newsroom/article/0,,id=206291,00.html  Once you calculate your total credit on Form 5405, transfer the amount onto your 1040 to reduce your taxable income.http://www.irs.gov/newsroom/article/0,,id=218698,00.html