Samantha Kielar is scrambling to find a house in Colorado before the doors slam shut on an $8,000 first-time buyer's tax credit she needs for her downpayment or home repairs.

The clock is ticking fast. Qualified borrowers need to have house offers accepted by the end of September to assure lenders enough time to beat the November 30 federal deadline to close deals, industry executives said.

I am willing to settle for something to finish buying quickly, said 20-year old Kielar, who works at the Denver County Jail, and is a part-time student. The tax credit carrot is speeding up the process, she said, adding that $8,000 could help remodel the house, redo carpets and cabinets.

For loans backed by the Federal Housing Administration (FHA), which require a minimum 3.5 percent downpayment, the $8,000 can be also be applied upfront toward the purchase rather than later on tax returns like other mortgages.

The National Association of Realtors projects 350,000 additional first-time buyers will own homes thanks to the tax credit, said spokesman Walter Malony.

First-time buyers are injecting life into the most severely battered housing market since the Great Depression.

Home sales have risen for three straight months, a ray of hope after three years of tumbling sales that swept prices down more than 30 percent on average and drove record foreclosures.

The state of housing is critical to the overall economy. While stabilizing, housing is unlikely to quickly recover as long as unemployment stays at the highest rate in more than a quarter century, most economists agree.

But various federal stimulus offers, mortgage rates that sank to record lows in April and pockets of economic strength make home buying more fathomable.

Odete Gomes, a 30-year old women's wholesale clothing buyer in New York City living with her parents and six-year old son, said the soon expiring tax credit kicked me in the butt to not lose this opportunity to buy her first home.

Especially now with the government helping you a little bit, you just gotta go for it, she said.

AFFORDABILITY, BUT OBSTACLES

Average 30-year home loan rates of 5.29 percent in the past week were above the all-time low of 4.78 percent set in April, but much lower than 6.52 percent a year ago, said home funding company Freddie Mac.

Rigid credit standards will prevent the type of wholesale lending that fueled a record home sales and price spree early this decade.

Still, distressed prices, plenty of available properties and low borrowing costs should keep housing from falling apart anew once the home buyer credit disappears, said Gregory Miller, chief economist at SunTrust Bank in Atlanta.

These programs are giving housing a boost, he said. When the tax credit expires, the housing market should have even more legs under it and gain traction on affordability.

Housing is on a sustainable path, Miller added. We have those who wanted to buy before but couldn't afford the price, and those who would have bought before but couldn't sell the existing house. Both of those groups are lined up to buy now.

The real estate industry is making a full-court press to get the Obama administration to extend the program, though health care and other priorities may derail those efforts.

Realtors said many borrowers remain unaware of the credit and its expiration date.

There needs to be an extra rush by buyers, because the transactions need to close by November 30 and that will put some types of transactions in peril, said Sherry Chris, president and chief executive of Better Homes and Gardens Real Estate in Parsippany, New Jersey.

Once aware, some potential first-time buyers, who tend to be younger and have less savings, will be unable to clean up their credit enough to get loans approved for the deadline.

Documentation has intensified since the financial crisis spawned by massive losses on loans made when standards were lax. The process has been prolonged as a result.

Gomes, who with a friend is buying a new $280,000 home in Newburgh, New York with an FHA loan, has an estimated closing date of September 30, almost two months from purchase commitment.

Some transactions, including foreclosures and short-sales, take much longer to complete.

Property owners are also expected to sweeten offers to lure potential buyers to capitalize on demand spurred by the tax credit in its final stages.

It wouldn't surprise me if sellers started coming out of the woodwork and began to offer incentives and began to become a little more proactive in selling their homes, Chris said.

For details on the credit from the Internal Revenue Service, click on link.reuters.com/rat32d

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