Staff Photo by Margaret Fenton Sheila Swanson paints her cabinets a new color on Saturday afternoon in her new East Brainerd 5-bedroom, 3-bath house. She bought the foreclosed property this spring for $99,500, and she is using her $8,000 federal tax credit to pay for remodeling throughout the house.

RINGGOLD, Ga. — Brian Jones’ parents own rental properties in Catoosa County, but when the Ringgold native proposed to his sweetheart on Valentine’s Day the young couple began looking for their own home.

“I didn’t want to pay someone else for my housing,” said Mr. Jones, 21, who works as a project manager at a local metal fabrication business. “I’ve worked since I was 16 and I figured it was a good time to buy.”

After touring nearly two dozen homes, Mr. Jones and his fiancee, Lisa Bivens, bought a foreclosed three-bedroom, two-bath home in April for less than $100,000. With a 30-year mortgage rate of 4.375 percent, the couple’s monthly payment will be $660. That’s comparable with most rental properties in the area.

The young home buyers also will get an $8,000 refund on their 2008 taxes before their September wedding, courtesy of Uncle Sam.

“I would suggest to most anyone that they try to buy now,” Mr. Jones said. “Home prices and interest rates are down, and the federal tax credit is a great extra bonus.”

Realtors eager to revive the depressed housing market are encouraging buyers to take advantage of such favorable conditions. The Georgia Association of Realtors has launched a statewide campaign to promote home sales this year, urging buyers to “Get off the Fence” and claiming “Now is the Right Time!”

But real estate agents concede that higher unemployment and down-payment requirements still are keeping many would-be buyers out of the market.

Nickie Schwartzkopf, an agent for Remax Properties who is president of the Chattanooga Association of Realtors, said the era of no-money-down home purchases is largely over.

In January, the Federal Housing Administration raised its minimum down payment from 3 percent to 3.5 percent. With closing costs, is will cost more than $4,000 to buy most homes.

“The tax credit is a great value for those that have the money,” Ms. Schwartzkopf said. “But it’s not so important for people who want to buy but don’t have the money for a down payment. Most first-time home buyers simply don’t have the 3.5 percent for a down payment.”

Still, Don Oaks, president of Mortgage South in Chattanooga, said he is seeing more first-time buyers in recent months.

“Surprisingly, a lot of them are still not aware of the stimulus tax credits,” he said. “A lot of people have heard about it, but they don’t always know how it works.”

The tax credit is part of the federal stimulus Congress adopted in February. The Georgia Legislature sweetened the incentive this year with its own tax credit.

Gov. Sonny Perdue signed the state tax credit into law in May. He said then that lost taxes from the credit will be more than offset by the extra economic activity spurred by boosting home sales.

“The housing tax credit is a strategic investment that strikes at the root of this economic downturn,” Mr. Perdue said when he signed the tax credit.

U.S. Sen. Johnny Isakson, R-Ga., last week introduced a federal measure to provide a $15,000 tax credit for any home purchase. The proposal would remove the income cap for eligible buyers and extend the credit into 2010 purchases.

“I believe that our economic problems start with the housing market and that we must restore the housing market if we are going to restore our economy,” Sen. Isakson said.

He proposed a similar measure earlier this year but it failed to make it into the stimulus package.

The National Association of Realtors is backing Sen. Isakson’s buyer incentives. Spokesman Walter Molony said first-time buyers were half of all buyers in the first quarter and 40 percent of buyers in April.

He said NAR predicts a 10 percent to 15 percent sales increase in the second half of 2009 from the same period in 2008.

“We’re now starting to see the impact from the tax credit,” he said.