Time is running out for first-time homebuyers to take advantage of the $8,000 tax credit set aside for them this year as part of the economic recovery effort. Barring a time extension, people looking to cash in must purchase a home by Nov. 30. Considering it usually takes 30 days to close on a house, now may be the time to act and Better Business Bureau offers guidance on how to benefit from the First-Time Home Buyers Tax Credit.

The First-Time Home Buyers Tax credit was created to stimulate the real estate market by encouraging first-time homebuyers. The tax credit is equal to 10 percent of the home’s purchase price, up to a maximum of $8,000. Qualifying participants simply claim the credit on their tax return.

More than 1.4 million first-time homebuyers have taken advantage of the tax credit so far this year, according to the IRS. The National Association of Realtors predicts that the tax credit will result in an extra 350,000 sales. There are six bills before Congress that would extend the tax credit at least until the end of 2009, but there is no guarantee that any will pass. According to CNN there has already been $14 billion allocated for the credit and fiscal conservatives are opposed to dedicating the additional funds that would be required if it were extended.

“With both interest rates and housing prices at record lows, now is a great time to buy a house if you can afford it and the tax credit sweetens the deal even more for first-time homebuyers,” said Paula Fleming, BBB spokesperson. “While it is a buyer’s market, it’s important that first-timers don’t rush into buying a house just to take advantage of the tax credit. It’s better to find that perfect house and investment later than feel pressured into buying something now just to get the credit.”

There are a few requirements for participation as well. For the purposes of taking advantage of the tax credit, a first-time homebuyer is defined as an individual who hasn’t owned a principal residence in the previous three years. An individual qualifies if they own a vacation home, however. Neither party in a married couple would qualify if either had owned a primary residence in the previous three years.

In order to receive the maximum credit, the modified adjusted gross income must be $75,000 or less for a single buyer and $150,000 or less for a joint couple. Single buyers earning between $75,000 and $95,000 and couples earning between $150,000 and $170,000 are eligible for a reduced credit.

The Secretary of Housing and Urban Development announced that buyers using FHA-insured mortgages could apply their anticipated tax credit immediately toward the purchase of a house. This is achieved through bridge loans by nonprofits or an FHA-approved lender.

Homebuyers must remain in the house for three years or they must return the credit. There are exceptions, including death or divorce.

For more advice on home buying, visit bbb.org.