The state expects that more than 150 homebuyers will be able to take out Hula Mae loans at a time when home prices are soaring.

Last month, O'ahu's median home price rose 35 percent from a year earlier to a record $610,000 for single-family residences, and to $265,000 for condominiums, meaning half the homes sold for more and half for less. The median single-family home price on Maui in May was $780,000.

"The low mortgage rate will provide the funding that many first-time homebuyers so desperately need, especially in the current housing market," said Stephanie Aveiro, Housing and Community Development agency executive director.

The Hula Mae interest rate is the lowest since the program began in 1979, and was below 30-year mortgage financing of about 5 percent plus a fee of 2 percent of the loan, also called points, offered by several local lenders yesterday.

Nationally, the average rate for a 30-year mortgage last week was 5.63 percent and 0.5 points, according to a Freddie Mac survey.

Under the Hula Mae program, the homebuyer and home seller each pay for half of the 2-point fee.

To be eligible for a Hula Mae loan, applicants cannot have owned an interest in a principal residence for the past three years, and cannot exceed income and home price limits.

For a family of three or more, the annual income limit is $94,920 on O'ahu, $95,060 on Maui, $90,440 on Kaua'i and $79,800 on the Big Island. The income limit is about $13,000 less for families of fewer than three.

The home price limit is $555,802 on O'ahu, $500,565 on Maui, $540,000 on Kaua'i and $360,000 on the Big Island.

Hula Mae financing was made possible by the state selling $75.2 million of revenue bonds, some of which was used to refinance previous bond issues.

The loans are expected to be available starting today through American Savings Bank, Bank of Hawaii, Countrywide Home Loans, First Hawaiian Bank, Hawaii HomeLoans, HomeStreet Bank and Wells Fargo Home Mortgage of Hawaii.