TEMECULA -- Falling prices have sparked new interest in the city's First Time Home Buyer Program.

The program, which is managed by the city's Redevelopment Agency, provides qualifying buyers with long-term loans to cover a down payment, making it possible for "moderate income" families to buy homes that they might not otherwise be able to afford.

For example, a family of four making no more than $77,400 a year is considered "moderate income" and they would qualify for assistance of up to 20 percent of the appraised value or purchase price of the home they are buying. A two-person household would qualify if the pair netted no more than $61,900 or less a year.

"Interest in the program has increased substantially in the last few months due to the drop in real estate prices," City Planner Patrick Richardson said recently.

The median home price in the two ZIP codes that cover most of Temecula fell from above $465,000 in May 2006 to less than $245,000 in May 2009, according to The Californian's analysis of sales numbers from MDA DataQuick, a research firm.

When home prices were skyrocketing, it was tough for moderate-income families to afford homes in the city, even factoring in the agency's assistance. The new lower prices, on the other hand, have allowed some people who had been renters to get mortgages that have payments lower than their rents, lending officials said.

To get the word out about the agency's program, which is bankrolled with $1.5 million in agency funds each year, Richardson said information has been posted on the city's Web site and callers to the city's Redevelopment Agency's main phone line are greeted with a prompt to find out more about the program. The agency also has met with the local Realtor's association to answer questions.

"We've done quite a bit of outreach," he said.

This year, so far, that outreach has translated into three closed loans, with most of the loans averaging between $35,000 and $40,000, Richardson said.

With more than $1 million earmarked for the program that hasn't yet been utilized, city officials said they would like to get that money working.

Unlike the California cities that offer smaller amounts of money to homebuyers in the forms of grants, the money provided by Temecula is eventually repaid by the buyers.

"The rationale was it would allow for folks to get into homes, and by requiring it to be repaid the money could recirculate back to the program," Richardson said.

Providing an example of how the city's program works, Richardson said a qualified buyer would receive a 30-year loan from the city -- a second mortgage -- that wouldn't need to be paid back during the first five years. It also wouldn't generate any interest during that time.

After five years, the borrower would be required to start making payments on the loan and a capped interest rate of 5 percent would kick in.

Of the three loans inked by the agency this year, Richardson said they were to help families get into foreclosed properties, which helped to stabilize their respective neighborhoods.

Karen Davis, one of the lending agents that is authorized to participate in the city's program, said one of the best things about Temecula's plan is the size of the down payment assistance that is offered.

"That's the biggest feature. It helps get you into a home that you wouldn't be able to get into and it's in line with reasonable incomes," she said.

Davis said that if more people knew about the program it would be even more popular than it already is.

"The hardest part is getting the word out," she said.

Earlier this year, the city announced that Tanya Weido, a single mom raising two daughters, was able to purchase a four-bedroom, two-bath home with a swimming pool for $215,000. Weido received $35,053 in assistance from the agency, lowering the first mortgage to $175,010.

Weido said that she found out about the agency's program from her real estate agent.

"It was good experience," she said. "We got a great house with a swimming pool in a really good neighborhood. Without the program, we wouldn't have been able to get the house. I highly recommend it to anyone."

Call staff writer Aaron Claverie at 951-676-4315, ext. 2624.

For more information on the program visit http://www.cityoftemecula.org/Temecula/Government/Redevelopment/firsttimehomebuyerprogram.htm or call Emery Papp at 694-6412.