Published: Tuesday, 27 Oct 2009 | 3:31 PM ET

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Top Democrats in the Senate have reached an agreement to extend the soon-to-expire $8,000 tax credit for first-time homebuyers, Senate Banking Committee Chairman Christopher Dodd said Tuesday.

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"We have that. Done," Dodd told reporters.

He declined to specify the details of the agreement.

But a Republican who has worked with Dodd cautioned that they were still negotiating on the measure, which could come up for a vote Tuesday evening as part of a package that would extend unemployment benefits.

"We're close, we're close but I can't get into any details until it's a done deal," said Republican Senator Johnny Isakson.

The popular tax credit, which has helped lift the housing market out of its worst slump since the Great Depression, is set to expire on Nov. 30.

Dodd and Isakson want to extend the credit through June of next year and broaden it to anyone buying a primary residence, not just first-time buyers.

Senate Majority Leader Harry Reid had backed a narrower version which would extend the full credit through March and gradually phase it out through the end of 2010.

Dodd said that the deal would merge the two proposals.

The House, which would also need to approve the measure, has yet to act.

The issue is front and center for financial markets. U.S. stocks sold off and the dollar moved sharply higher on Monday after a misleading media headline said research firm ISI Group had written that the tax credit probably would not be extended when it expires Nov. 30.

A Senate vote is expected around 6 pm Tuesday on whether to take up a bill to extend insurance benefits for unemployed workers.

If Senate Majority Leader Harry Reid can get the 60 votes needed to do that, it would clear the way for further votes and he has said he would offer a tax credit extension as an amendment.

It is not clear when those votes would take place. While it is possible those votes could come later on Tuesday night, they are more likely to be pushed to later this week or next week.

The White House has raised concerns about the cost of expanding the credit. Lawrence Summers, President Barack Obama's top economic adviser, told Reuters last week that the administration would be open to extending the existing credit but wants to see it remain focused on first-time buyers.

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Simply extending the current tax credit is estimated to cost $1 billion a month.

House Speaker Nancy Pelosi appears to be waiting to take her cue from the Senate. Asked about the tax credit earlier this month, the California Democrat said "the question is, would that be just first-time homeowners or would you open it up to other purchasers of homes?"

A House Democratic aide said House leaders would likely adopt whatever language the Senate approves, which would avoid the need for negotiations to reach a compromise. Unlike the Senate, the House has already passed an extension of benefits for unemployment insurance.

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