People are afraid to buy a home in times like these, with the economy tanking and home prices continuing to fall. But if you're brave enough to stray from the herd, you might be in for the home-buying opportunity of a lifetime.

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People can get a lot of what they need and almost all of what they want today.  Once a few people get off the fence, there's safety in numbers and you lose your leverage.

If you're qualified to buy a home now, the purchase makes sense for your situation and you're prepared to live in that home for at least five years, there are five reasons why you may be headed for a great deal:

1. Affordability is better than ever

According to the National Association of Realtors' housing affordability index, homes were more affordable in February 2009 than at any other point since the group started the index in 1970. The affordability index is a measure of the relationship between home prices, mortgage interest rates and family income.

A recent report from Moody's Economy.com predicted that house prices will stabilize by the end of this year, even though house price index will fall another 11% from the fourth quarter of 2008. By the end of the real-estate downturn, prices will have fallen by double digits, from peak to trough, in almost 62% of the nation's 381 metro areas, according to the report. In 10% of the areas, declines will be more than 30%.

Not all markets have experienced huge drops, however, so it's wise to take a look at how far prices have fallen in your area. The Office of Federal Housing Enterprise Oversight's Web site has a house price calculator that can help.
Visit the calculator.

2. You have a large inventory to choose from

In many places it is taking months to sell a home, creating loads of inventory -- from new homes to existing homes to foreclosures and short sales

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A large selection gives buyers more choices and drives down prices. And home sellers have gotten the picture.  It's fair to say that home sellers have become "increasingly desperate".  "People who have had for sale signs in the yard for six months are starting to become in tune with the reality of the situation," he said. Buyers can take advantage.

But if you put off a purchase until inventory shrinks substantially, you might not get as good a price.  And be forewarned: It's nearly impossible to time the exact bottom of the housing market and even if you do there's no guarantee you'll make a killing.
Buy for quality of life... don't buy on speculation.

3. Foreclosed properties are not always in poor condition.

Though this is generally the case, there can be significant issues hiding behind an attractive and seemingly well-tended façade. Do your research before purchasing any foreclosed property, being sure to find out how long maintenance had been deferred before it hit the market, as well as how long it's been sitting idle and waiting for a buyer.

4. Mortgage rates are historically low

It's not just the price of the home that will affect affordability; mortgage terms will also affect your monthly payments.

These days, rates are very attractive for conforming loans, those that can be purchased by mortgage agencies Fannie Mae and Freddie Mac. (The current limit is $417,000, although that can rise as high as $729,750 in high-cost markets.)

Earlier this year, rates on the popular 30-year fixed-rate mortgage hit a level not seen in decades, and rates have stayed relatively near that low for weeks. But low rates don't mean lenders are handing out mortgages easily. You'll need good credit, a substantial down payment and a willingness to document your income in order to qualify for those great rates, if you can qualify at all.

5. You can get a federal tax credit

There's now a federal credit of up to $8,000 for home buyers who haven't owned a home in at least three years.

Unlike the previous credit, this is money that doesn't have to be paid back. That extra cash will come in handy: The average first-time home buyer spends about $6,000 in the first six months of owning a home. 

Waiting for further federal developments, however, might sap a buyer's negotiating power, as more people get back into the market and competition returns.