It's a common mistake for home-buyers-to-be: They focus on saving as much money as possible for a down payment instead of paying off other debts. A better approach is to use extra cash to eliminate credit-card and other high-interest consumer debt even if that means you can put down less on your future home, says Lori Vella, senior vice president of national lending for Washington Mutual.



Usually, for those who want to buy a home for , the best way they can find the money for the home of their aspiration is to take out a loan. This is as a rule renowned as a debt loan. For a major time home consumer, loans such as bridging loan loans can be very bewildering.

Now you're ready to start shopping around for the right loan. As we said, a first-time home buyer with a steady job and good credit can put down as little as 3% these days. These loans are more available, and more reasonably priced, now that they're acceptable to Fannie Mae and Freddie Mac

Private lenders are also coming up with their own programs to tap into the first-time home buyers' market. Washington Mutual, for example, offers a program for buyers with a 10% down payment: Instead of charging for mortgage insurance, the savings-and-loan builds the cost into the interest rate, making it tax-deductible (which mortgage-insurance premiums aren't).

There's no income limit to qualify for an FHA-insured loan. However, since these loans are geared toward helping first-time home buyers and low- to moderate-income families, there's a limit to how much you can borrow. The amount varies from region to region, but it's capped at $290,319 in high-cost areas ($403,750 in Hawaii), says Laurie Maggiano, a HUD spokeswoman. To check your area's ceiling

In this new era of interest-only loans, many home buyers are skipping this advice. But if you can swing it, this is still the way to go. Not only will this provide some equity in your home, but it's also a way to avoid private mortgage insurance, or PMI. (This protects the lender if you default on the loan.) Costs for PMI can be significant over time " about $40 a month per $100,000 of the loan, according to estimates by the Federal Trade Commission.

With mortgage loans, it is common to be paying more in terms of interest than principal. Usually, you will be paying around two to three times more in terms of interest than you will be with your principal amount. The first few years of loan payment you will be making will usually be for the interest rate of the loan while the last few payments will be for the principal amount.