Here's a link to the IRS information on the credit: http://bit.ly/HomeBuyerTaxCredit
Hope that helps.
The problem is how much you make. yearly income x 3 = safe mortgage. I have seen a few say that social security incomes where it is not taxes can be multiplied by 125% for figuring mortgages.
The real question is how much a month can you safely afford?
Can you handle any repairs that will come up?
Do you have the money for a down payment, closing costs, and then still have enough extra to handle some repairs that could happen right after you buy the house?
Sometimes renting makes more sense than buying does.
Sometimes buying makes more sense than renting does.
Look at the blog below. It allows to to calculate which is really better for you.