The current home buying frenzy has resulted in rapid escalation of home values during the last several years. Certain areas of the country have seen values climb by 100% or more during the last four years. Many first time home buyers have sat on the sidelines watching as the cost of owning a home has spiraled out of reach. Traditionally, future home buyers were taught to save their money to get into their first home. This thinking left many with a dilemma. How does one save money when they are stretched too thin on a monthly budget with high rental prices and little to no tax deductions? It is and has always been nearly impossible. Federal Housing Administration (FHA) was the only option for low down payments up to the late 1990s until some of the larger mortgage investors came up with their own low down payment options and took on the larger risk of home depreciation by requiring little to no money down.

How do you get a low to no money down loan?

First, talk with a qualified company that has experience with 100% financing and first time home buyers. Check local mortgage Web sites to see some innovative programs.

Second, find out how much you can afford based on your monthly income and budget. It is a good idea to add in all of your expenses so you are leaving room for entertainment. Yes, many people sacrifice a bit of their Pleasure expenditures when buying their first home. You will not be alone in this respect. Dont forget the tax deduction you will receive as a home owner, in most cases. The tax savings should improve your monthly cash flow.

Third, get a good credit check up. You can visit http://www.freecreditreport.com and obtain a credit report on yourself. You should obtain the credit score version because they will be important on most 100% financing programs. Your scores should be somewhere above 640 or more to qualify for most programs, though some programs allow lower scores than that.

Forth, obtain a pre approval letter from your lender or broker so you can present this to your Realtor when shopping for your home. Make sure the terms and costs are accurate so you dont have any surprises at the closing table.

Fifth, dont bite off a larger payment than you can afford. Many times, lenders allow you to spend 50% to 55% of your monthly gross income on your credit items. This doesnt always leave much for essentials like groceries and utilities.

Lastly, remember the first year of home ownership is usually the toughest. After a year or two, you can generally refinance your home loan into one loan that may be a better interest rate, depending on where interest rates are at the time of refinancing. The plan is to eventually have equity and start your nest egg growing.