In a few pockets of the country, though, home values have held their own, and some have even seen slight increases. The best place to own a home right now? Texas. Relatively conservative lending practices in the Lone Star State have buttressed homeowners from the worst of the subprime-mortgage mess. Additionally, Texas has a vibrant and diverse manufacturing sector, which has kept unemployment – and foreclosures – low.

The hardest-hit metro areas have been in the Central Valley and the Southwest, where speculative building and subprime loans a few years ago inflated the housing bubble. Now, the recession and job losses are pushing more homes into foreclosure. In turn, foreclosure bargains are luring new home buyers into the market and increasing number of sales but dragging median home values further down.

To see the ten metropolitan areas where median home values have increased the most, take a look at our slide show, Ten Cities With Rising Home Values. And to see where home values have dropped the most, check out our slide show, Ten Cities Where Home Prices Have Plummeted.

Researching the top ten cities where home values increased in 2008, we identified a few characteristics of successful real estate markets. Not every city on our list shares all of these characteristics, but a combination of them has spelled success for many metro areas.

A diverse set of industries. When a community relies too heavily on one sector, changes in that industry can be devastating to the local economy. A solid blend of midsize manufacturing and retail companies minimizes unemployment and keeps the local economy stable.

A college or university. In State College, Pennsylvania, for example, Penn State University is the local economy’s lifeblood, keeping housing prices on an even keel. But even in towns without major universities, smaller community colleges can provide secure jobs and attract home buyers.

A major hospital. Health care is one of the few industries still growing during the recession. Hospitals, especially regional ones, provide lots of jobs over large areas and help to stabilize housing values.

Q. Are there any no-down payment programs left?

Yes. While it’s true that most of the popular no-down payment programs disappeared in the wake of the subprime mortgage collapse, there are still two longstanding government-backed programs that offer mortgages with no down payment: the USDA Rural Development Program and the VA Loan Program.

A USDA Guaranteed Loan is a government-insured, 100% purchase loan. This means there is no down payment required if you – and the house you intend to buy – qualify for the program. Not all areas qualify, but you’d be surprised at how many neighborhoods in your area do. There are income and other limitations, but if coming up with a down payment is challenging, you might want to consider this program.

If you or your spouse is a military veteran, you may qualify for a 100% financed loan from the US Department of Veterans Affairs. More than 29 million veterans and service personnel qualify for this service benefit. Give us a call to find out if you’re one of them.

Q. Are there any other government-insured programs that can help someone struggling with a down payment?

Yes. In 1965, the federal government created the FHA loan programs to encourage homeownership throughout the country. FHA-insured mortgages offer many benefits, including a minimum down payment of 3.5%. FHA-insured loans have grown in popularity recently due to the seller’s ability to pay closing costs up to 6% and a temporary increase in loan limits up to $729,750 in certain high-cost areas, which allows more potential buyers to utilize this program.

Q. May I use a gift from family members as part of my down payment?

Yes. In many cases, immediate family can provide monetary gifts to be used as a down payment. There are restrictions of course, and strict documentation will be required, but we will gladly walk you through the finer details of this process. Be sure to mention this option when you’re filling out an application with us.

Q. May I use funds from my IRA for my down payment?

Yes. First-time home buyers can use funds from an IRA under certain circumstances for a down payment. The rules regarding this option, however, can be complicated, especially with a Roth IRA, and it’s important to understand any and all tax implications before tapping into these accounts. Please talk to your tax professional before making any decisions. If you don’t have one, we’ll gladly refer you to one we work with on a regular basis.

Q. May I use the $8,000 tax credit as my down payment?