Do you want to buy a home but are worried about being able to get a mortgage? Don't forget to look to your state for help.

Virtually all U.S. states offer some kind of home buyer assistance programs. Though details vary from state to state, most offer help with down payments or closing costs, while some even provide for fixed-rate mortgages at below market rates for qualifying borrowers.

These programs are typically offered through a state department of housing, community development or the equivalent authority in a given state.

Most aimed at first-timer buyers, veterans

Many of these programs are intended for first-time homebuyers or military veterans, though others are available to other types of borrowers as well. Most are limited to low-to-moderate income homebuyers, though the definition of this varies from state to state, and may have upper limits on home prices as well. Many of these restrictions may not apply, however, if you purchase a home in an area targeted for redevelopment, depending on the program in your state.

One of the most common forms of assistance is a loan or grant to help with down payment or closing costs. Often, the loan is one that does not have to be repaid if the borrower remains in the home for at least 10 years. These typically offer assistance equal to about 3 percent of the sales price, with the understanding that borrowers put up about 1 percent of the price from their own assets. Again, specifics vary among the states.

New York offers multiple programs

New York state offers a variety programs to assist first-time homebuyers through the State of New York Mortgage Agency (SONYMA), including loans of $1,000-$5,000 to assist with closing costs and which are forgiven if the buyer keeps the home for 10 years.

The SONYMA Low Interest Rate program helps low-to-moderate income homebuyers obtain 30- or 40-year fixed rate mortgages at about 1 percent below prevailing market rates. Repeat home buyers can qualify if purchasing a home in a designated Target Area. The Remodel New York program offers financing for purchasing and renovating properties in need of repair.

Illinois' Home Start program offers assistance to first-time homebuyers (defined as not owning a home in the past three years) and veterans in obtaining an FHA loan at below-market costs. The program also offers optional down payment assistance up to 3 percent of the purchase prices ($6,000 maximum) in the form of a no-interest loan forgiven after 10 years if the borrower remains in the home. Borrowers taking the down payment option pay half a percent more in interest than those who do not.

Substantial down payment help in Washington state

Washington state offers a variety of down payment assistance programs, including up to $50,000 in a zero-interest, 15-year, forgivable loan for persons buying foreclosed property in the city of Federal Way. Others offer forgivable loans of up to $10,000 for down payment assistance throughout the state. The loans are tied to the state's House Key State Bond Loan Program, which provides low interest rate primary mortgages for first-time homebuyers and other buyers purchasing in targeted areas.

All state home buyer assistance programs require that you occupy the home that you purchase. However, some allow the purchase of up to a four-unit building, allowing investment-minded buyers to occupy one and rent out the other three.

Not everyone will be able to qualify for state mortgage assistance, particularly high-income persons looking to purchase high-value homes. But for low- to moderate- income buyers, it's definitely worthwhile to see what your state has to offer, even if you're not a first-time homebuyer or veteran. Even high-income buyers may find something to attract them in a program designed for targeted areas, particularly if they are drawn to urban areas on the cusp of renewal.

Published on March 11, 2010