Loan Rates, Mortgage Interests, Personal Loans, Credit Interests, Calculators

States still have special mortgages, down payment assistance or other help for first-time home buyers.

Some programs don’t have as much money as they did before the mortgage crisis hit.

A few states — notably Alabama, Arizona, Kansas, Oregon, Texas and Wisconsin — had to suspend some loan programs in 2009 because of the difficulty of selling revenue bonds to pay for them. They say they hope to restart the programs once the markets rebound.

But some states offered new programs, including short-term, interest-free loans so borrowers could tap in advance the $8,000 federal tax credit for first-time buyers.

A few also have interest-free loans for buying or repairing foreclosed properties.

Most state programs for first-time buyers are limited to those who haven’t owned a primary residence for three years. But many also extend the programs to people who want to move to designated areas, whether or not they are first-time buyers.

These programs usually have restrictions, such as limits on how much money you can make or the price of the home you want to buy. Good credit helps. Steady work is a must. Some require that you take a homeownership course.

Applying isn’t any more difficult or time-consuming than applying for a conventional mortgage, but the potential benefits are appealing enough that all first-time buyers should find out what’s available.

This kind of help is especially important since the rash of defaults put loans out of the reach of many first-time buyers.

Here’s the kind of help you can expect to find through state home financing agencies:

Loans with lower interest rates. These generally are 30- or 40-year, fixed-rate loans. Most have income caps and some have caps on the purchase price of the home.

Cash for down payments and closing costs. Amounts vary, and there generally are income caps and other restrictions. But in many cases, these loans never have to be repaid if you live in the home long enough. Sometimes, you must participate in the state’s low-cost loan program to get down payment help.

Loans toward the purchase or repair of foreclosed homes. In 2009, Indiana became one of the first states to offer 0% loans using money from the federal Neighborhood Stabilization Program.

Eligible Hoosiers could apply for up to $15,000 toward a primary residence, with the possibility of $10,000 more through matching funds from a bank, to use for down payments and closing costs.

Many other states started similar programs, including Arizona, California, Georgia, Iowa, Michigan, Minnesota, Missouri, Wisconsin and the District of Columbia.

Income tax credit programs. Mortgage Credit Certificates allow qualified applicants to claim a federal tax credit of 20% or more of the interest paid on their mortgage each year, for the life of the loan. This increases disposable income so borrowers may be eligible for a larger loan.

In a new wrinkle in 2009, some states are also offering short-term loans so first-time home buyers who qualify for an $8,000 federal income tax credit can access at least some of it in advance for down payments, closing costs or the mortgage loan itself.

These programs work in various ways, but generally borrowers pay no interest unless they fail to repay the loan when they receive their tax refund in 2010. The loan may be secured by a lien on the property.

To qualify for the federal tax credit, you have to close on a home before Dec. 1, 2009. Many of the short-term loan programs got under way in the summer — Illinois launched one on July 22 — and may have limited funding, so buyers would have to move fast to take advantage of them.

Help for public-sector employees, people with special needs and others. Not every state offers this kind of assistance, but some have special loan programs for teachers, police officers and fire fighters, state and municipal workers, people with disabilities, veterans and active-duty servicemen and women, and others. (Massachusetts even has a program for frequent riders of public transit.)

First-time buyer loans and down payment assistance programs may not be for everyone, but it’s smart to investigate what’s available, especially if you’ve had credit problems.

Start by checking to see what your state has to offer. Some state Web sites also have links to programs managed by local governments and community agencies.

Here’s where to find links to each state’s first-time buyers programs. Remember that these programs can change, so it’s wise to check the Web sites periodically for updates.

Source:mortgages.interest.com