Recent record low mortgage rates and a big drop in home prices has made housing more affordable these days. In fact, housing affordability has just hit news highs according to the National Association of Realtors. 

For every .50 percent drop in mortgage prices the monthly cost of owning a home decreases by $31.00 per $100,000 borrowed. On a $500,000 mortgage, the savings would be $445.00 per month. Another benefit to lower rates is the home buyer can qualify for a more expensive home and a larger mortgage.

In addition to the drop in home prices and mortgage rates, the government is also making housing more affordable by giving first time home buyers a tax credit of $8,000 if you buy a home between January 1, 2009 and December 1, 2009.

If you are eligible for the program, you can claim 10 percent of the price of their home, up to an $8,000 maximum, against your 2008 federal tax returns due this year, or your 2009 federal tax returns due next year. The credit begins to phase out at a modified adjusted gross income of more than $75,000, or $150,000 for joint filers.Unlike last year’s tax credit, this credit does not have to be paid back.