An Open Door for First-Time Home Buyers

Attention aspiring homeowners: Don't be scared off by rumors that you need a stratospheric down payment and the squeakiest of credit histories to get into a house.

A 10% down payment is now the norm, says Jim McMillan, a senior loan officer for JP Morgan, but you can find 5%-down-payment loans.

Zero-down-payment options are nigh extinct, but if you're working with a conforming loan of $417,000 or less and a credit score of at least 700, you might find one. You'll pay private mortgage insurance (usually about $50 to $100 per month) on loans for more than 80% of the purchase price.

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Lenders have become sticklers about ensuring that borrowers don't overextend themselves, so expect to provide stricter proof of income. Borrowers who get adjustable-rate loans will need to qualify for the fully indexed rate.

The Federal Housing Administration's mortgage-insurance program gives buyers with spotty credit a better shot at approval. In December, Congress was still kicking around legislation that would loosen rules on down payments and extend the FHA's reach to more condo buyers.

State and local government resources offer down-payment assistance, and getting help generally doesn't affect your eligibility for favorable mortgage terms. Check HUD Local Homebuying Programs for resources in your area.