State mortgage programs can help you buy a home

Hands framing house made of money

Not only can you get a pretty good deal on a home loan if you qualify for a state program for first-time buyers, but now you might be able to snap up the home of your dreams -- at a bargain-basement price.

A few states are now listing their foreclosed properties online, offering a kind of one-stop-shopping opportunity for homes, loans and down payment and closing cost assistance programs.

Colorado, Connecticut, Illinois, Kentucky, Massachusetts, New Hampshire, New York, North Carolina and Vermont are posting listings of homes for sale. Some lists are plain-vanilla and not very extensive, but a few feature photos and more detailed information on the properties.

Among the best are those by:

Most states still offer mortgage loan programs for first-time buyers with competitive or below-market rates. Notably, however, California offers only down payment assistance loans (at 3.25%), not first mortgages.

A sampling of others:

Connecticut's 30-year, fixed loan rate for its Home of Your Own Program (www.chfa.org) for first-time buyers was 2.875% in mid-June -- among the lowest rates posted on state program websites. (The national average for 30-year loans was 3.92% in early June.)

Montana (housing.mt.gov) was advertising a great rate for veterans -- 2.238%. (Its loans for veterans are always 1% below the lower of either Fannie Mae's 60-day delivery rate or the market rate of the Montana Board of Housing's regular bond program.) Many other states also give veterans an extra break on home loans, and usually veterans don't need to qualify as first-time buyers.

The Illinois Housing Development Authority (www.ihda.org) was offering FHA, USDA and VA loan rates of 3.75% for first-time buyers, or 4.25% with down payment assistance, and conventional loan rates of 4.10%, or 4.60% with down payment help.

Nevada, New York, Idaho and Maine were among those with 30-year loans going for 3.50%.

Loans for first-time buyers generally require you to meet certain income or house price limits to qualify.

But their low rates will decrease your monthly payment, and you can often get cash for down payments and closing costs. Some of the down payment loans never have to be repaid if you live in the home long enough.

Most of these loans are limited to buyers who haven't owned a primary residence for three years, unless you're buying in a targeted area. You'll need a steady income and a decent credit score, too.

Applying isn't any more difficult or time-consuming than applying for a conventional mortgage. Many of the programs work through networks of private lenders.

Here are other kinds of help you may be able to find in your state:

Loans to buy and repair homes. Massachusetts (www.masshousing.com) offers purchase and rehabilitation loans to cover 97% of the purchase price plus rehabilitation costs or the estimated value of the home after rehabilitation, whichever is less.

Borrowers need a 3% down payment, and they must meet income and purchase price requirements. New York (www.nyhomes.org) has a similar program but requires only a 1% cash contribution from borrowers.

Tax credit programs. Mortgage Credit Certificates allow qualified applicants to claim 20% or more of the interest they pay each year as a federal tax credit. That credit is subtracted from the amount a homeowner owes in income taxes, up to $2,000.

The remaining interest still qualifies for the standard mortgage deduction, which is subtracted from the homeowner's taxable income.

Help for public-sector employees, people with special needs and others. Some states have special mortgage loan programs for teachers, police officers and fire fighters, state and municipal workers, people with disabilities, health care workers, veterans and active-duty servicemen and women.

North Dakota (www.ndhfa.org) includes single-parent households in the mix. Nevada offers below-market rates to teachers plus a second loan to subsidize mortgage payments for the first five years.

Ohio (www.ohiohome.org) has a Grants for Grads program geared toward helping recent high school or college grads put down roots. The grants are for 2.5% of the purchase price in the form of a 0% interest loan that is forgivable after five years. (If you move before then, you'll have to pay back all or a substantial part of the loan.)

North Dakota's Roots program targets new arrivals and Dakotans who have left the state more than a year ago but want to return.

A few states have additional enticements:

These programs aren't 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 offers.

Here's where to find links to state first-time home buyer programs.

Remember -- these programs can change, so it's wise to check the websites periodically for updates.