St. Paul is piling on the incentives to get first-time homebuyers to purchase property in the city.

Later this month, St. Paul and Minneapolis officials will unveil a program that provides $8 million worth of federal tax credits to qualified first-time homebuyers who purchase homes in either city.

On Wednesday, St. Paul's Housing and Redevelopment Authority voted to sweeten the deal for some of those tax credit recipients who buy in St. Paul and also happen to be "heroes" — veterans, members of the U.S. armed forces, firefighters, emergency medical technicians, paramedics, health care workers and certain public sector employees.

Those borrowers could receive loans of up to $15,000 for down-payment assistance, closing costs or reducing the principal amount owed on a mortgage.

"It's (for) that everyday hero — it's that teacher, it's that firefighter," said Council Member Lee Helgen during Wednesday's meeting of the HRA. "Somebody who's going to care about the community."

The federal program, called Take Credit, is meant to help up to 130 first-time homebuyers in St. Paul who meet certain limits on income and the price of the home being purchased. The city will spend an additional $500,000 to provide loans to about 33 people in the heroes program, which the HRA unanimously approved Wednesday.

Both efforts come at a time when the federal government is offering tax credits of up to $8,000 for first-time homebuyers who purchase a home before Dec. 1. Those credits are an attempt to jump-start the ailing housing market by giving incentives to potential buyers who don't have to worry about simultaneously selling a home.

While homebuyers would use the federal government's tax credit within the first year or two, the city's program provides credits against federal taxes for the life of the mortgage. The program lets first-time homebuyers take 20 percent of their mortgage-interest payment in a year as a credit against their total tax, rather than as a deduction against taxable income.

That way, the credit gives homeowners a "dollar-for-dollar" reduction in taxes owed for the year, city officials say.

First-time homebuyers in the city program would pay a one-time participation fee of $575, which pays for administrative and lender costs as well as processing fees. But city officials say that a taxpayer with a $175,000 mortgage, for example, would more than recover the $575 by way of the tax credit within the first year.

Loans provided in the heroes program would carry a 0 percent interest rate, and periodic payments on the loan would not be required. Instead, repayment would come when the house is sold or if the homeowner no longer uses the home as his or her primary residence.

Loans would be forgiven completely for borrowers who reside in homes as their primary residence for longer than 10 years.

"Neither one of the programs will be available until later this month," said Natalie Fedie, a city spokeswoman. The city still is working to determine which mortgage lenders will help implement the programs.