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For many who begin thinking about purchasing their first home, the process of finding the right home and mortgage loan to meet your budget may seem somewhat confusing. Researching the programs available for first time home buyers is essential to understanding your options and capabilities in financing your first home. There are many local and statewide housing assistance programs available for those interested in purchasing their first home in the Seattle area.

Many mortgage loan companies require the buyer to pay 20 percent of the home's value as a down payment. To many families, this may be somewhat difficult on the family budget. One option that many use to help reduce the required 20 percent down payment is to purchase Private Mortgage Insurance. With this insurance, the buyer will be able to pay as little as 3 to 5 percent down and the lender will have insurance in case the buyer defaults on the home loan. Although the option of obtaining a PMI is used frequently, it is not the most beneficial of programs. Although your down payment requirements are decreased with a PMI, your monthly payments will be increased and the cost of the PMI is not tax deductible. Once a buyer has gotten a PMI most of the time they find themselves later trying to find ways to get out of the PMI. The Homeowners Protection Act has rules that automatically suspend PMI payments after the buyers equity in the home reaches 22 percent. The rules apply to mortgage loans received on or after July 29, 1999, although those rules do not apply to government insured loans such as FHA or VA, as these loans are considered to be at a higher risk for default.

One option that the buyer could consider is checking into the many statewide and local down payment assistance programs available to see if they could qualify for down payment assistance. One requirement for buyers to be able to qualify for state down-payment assistance is that they must enroll in the House Key State Bond Loan Program. One misconception that buyers tend to have is that they could not possibly qualify for such a program or that these programs are a type of welfare program. This is not so. These programs are configured in many ways and offer many options to first time home buyers in an attempt to give more families an opportunity to own a home.

Some of the down payment assistance programs offered in the Seattle area include the following.

The Homestead Community Land Trust: offers up to $80,000 in down payment assistance to Seattle buyers making up to 80% of the Seattle metropolitan area's median income. Which for a single person would be about $40,600 a year and $58,000 a year for a family of four.

Teacher Home Buyer Program: offers up to $45,000 in loans with a 3% interest rate to Seattle teachers earning 80% of the median income.

Homesight: offers up to $45,000 in loan with a 3% interest rate to buyers who make up to 80% of the median income and have not owned a home in the last three years.

Homechoice: offers up to $15,000 down payment assistance to people who are spending more then 30% of their gross income on unsafe or overcrowded housing and that earn between 25 to 50% of the median income.

Parkview Services: offers up to $45,000 in down payment assistance to people with developmental disabilities.

Habitat for Humanity: Homeowners are given the opportunity to use "sweat equity", which is providing your labor of 250 to 500 hours to help build your new home. This is offered to buyers who make 25 to 50% of the median income and are spending more then 30% of their gross income on overcrowded or unsafe housing. The average monthly payment on a no-interest mortgage with this program is around %500 to $800.

These are just a few of the many down payment assistance programs available in the Seattle area. To find more information on assistance programs available in the Seattle area to purchase your new home contact the Washington Homeownership Center, toll free at 866-600-6466.

Another option available to the first time buyer if they can not qualify for one of the state offered home buyer assistance programs, but want to avoid a Private Mortgage Insurance, is to consider a Piggyback loan. What this consists of is taking out a first mortgage that covers 80% if the sale price of the home and getting a second mortgage that covers 5-10 or 15% of the sale price of the home, leaving the buyer to pay the remainder of the down payment. For instance if you chose a 80% first mortgage with a 15% second mortgage you would have to pay 5% of the down payment. Although your second mortgage may carry a higher interest rate then your first mortgage you may save money in the long run over a PMI as the payment on your second mortgage is tax deductible.

As you can see, there are many options you can check into for down payment assistance. Researching all your options would be the best thing that you can do for you and your family. Buying your first home is one of the biggest financial steps you will take, ensuring that you are getting the best deal available and a home that is affordable is vital to you. Take the time to make sure that you are indeed getting a mortgage that you can live with in the years to come.

Remember, before applying for any type of mortgage loan to contact the nearest loan advisor for up to date information and advice so that you can be sure to get the best loan available for your needs.

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Connie Bolin is a writer for Atnetworld and Ezfinder. She does extensive research on the 50 largest cities in the US and finds what makes them unique. She loves Seattle because of the strong real estate market and job growth the city offers.

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