All buyers should be aware of special financing opportunities. In some cases, they make purchases possible. In others, they result in substantial savings for the buyer.

Assumable mortgages (Qualifying and Non-qualifying) - You may find a home with a mortgage loan you can "assume" from the previous owner. This practice was popular prior to the 1990s. Many times when sellers were unable to sell his home outright, they would let a buyer "assume" the mortgage--that is, take over making the payments on the seller's existing mortgage. At times, the new buyer didn't make the payments and the seller ended up without the house and a bad credit rating. Now, most knowledgeable sellers refuse to let their mortgages be assumed. For the seller, it's just not worth taking the risk. As a buyer, if you may still find a seller willing to let you assume his loan. But be careful. It may or may not be a good deal.

Buy downs - A buy down occurs when the interest rate and payment are reduced by paying increased discount points (as in permanent buy down) or when the payment is temporarily reduced by pre-paying the interest (as in a temporary buy down). When interest rates are very high and a seller is having trouble finding a buyer that can qualify for his home, he will sometimes "buy down" the rate in order for the buyer to qualify for his home. In another example, builders often use "buy downs" to make their homes more attractive. They pay the fees and the purchaser gets a lower interest rate.

Down-payment gift assistance programs - Basically these programs are used in conjunction with an FHA loan. The goal of the program is to assist buyers (not just first-time buyers) to purchase a home with no money down. Since FHA guidelines require a minimum of 3% down payment, the programs uses a "twist" to get the seller to donate the down payment to a "charitable fund." The charitable fund, in turn, "grants" the purchaser a 3% down payment.

80/10/10 loans - Mortgage insurance can add as much as 66 cents per thousand dollars to your monthly payment (that's $132 per month on a $200,000 loan). Mortgage insurance is expensive (and not tax deductible). A new kind of loan, called an 80/10/10 loan, can allow you to avoid mortgage insurance without requiring a 20% down payment. You get one mortgage for 80% of the sale price, a second mortgage for 10% of the price, and make just a 10% down payment. Since the first mortgage is 80% or less, there is no mortgage insurance. The second mortgage, however, is always at an above-market rate (about 2¼% higher). But the blended rate of the two mortgages yields only about a ¼% higher rate overall. On a $200,000 mortgage, an 80/10/10 loan can save you as much as $132 per month on mortgage insurance for only about $30 per month in higher interest. That's a net savings of up to $100 per month. Some lenders will even do 80/15/5 loans, allowing you to avoid mortgage insurance with only 5% down.

FHA loans - An FHA mortgage is insured by the Federal Housing Administration (a division of the federal Department of Housing and Urban Development). Although mortgage lenders provide the mortgage funds, the FHA sets underwriting standards for approving applicants. Borrowers qualify under FHA guidelines. In most cases, both one-time and monthly mortgage insurance premiums are required regardless of the amount of the down payment. The minimum down payment starts as low as 3%. The down payment can be from a gift or borrowed funds secured by collateral. FHA loans are offered to all and they have lower qualifying standards than conventional loans.

Interest-only Loans - An innovative financing option that lets you only pay only interest on your mortgage, typically for up to 10 years, so you have more funds available to invest or to meet other financial needs and/or obligations. A mortgage with interest only payments may be appropriate if you want to minimize your current monthly mortgage payment, increase your potential tax deductions, possibly qualify for a larger house, have additional funds available for investments or other real estate purposes.

No Income, No Asset Verification and Stated Income Loans - No income and no asset verification and stated income mortgages are specialty loans that do not verify a borrower's income or assets with traditional documentation. The are primarily for the self employed. These loans are typically available only to those borrowers with high credit scores.

100% Financing or "zero money down" - Many potential home buyers never take the first step in home ownership because they lack the money for a down payment. Many loan programs allow a borrower to finance 100% of the purchase price and even allow the seller to contribute toward the closing costs. Financing 100% of the purchase makes it easier for potential home buyers to get into their dream homes without having to empty their bank accounts and savings. These programs are not only available to first time home buyers, but every type of borrower, even those with credit problems.

Seller financing - Seller financing is when a seller helps to finance a real estate transaction by taking back a second note or even financing the entire purchase if the seller owns the home free and clear. Usually sellers do this when a buyer has difficulty qualifying for a conventional loan or meeting the purchase price. Fear of default makes many sellers reluctant to take back a second. But seller financing can bring a higher price plus complete the sale sooner in some situations. Seller financing differs from a traditional loan because the seller does not give the buyer cash to complete the purchase, as does a lender. Instead, it involves extending a credit against the purchase price of the home while the buyer executes a promissory note and trust deed in the seller's favor. These special circumstances must be acceptable to the lender who makes the first mortgage on the property.

Special mortgages for first-time homebuyers - Lenders now offer several affordable mortgage options, which can help first-time homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have significant long-term debt or have experienced income irregularities.

Subprime loans - If you have bad credit, you may not qualify for a conventional loan. In this case, you could consider a subprime loan. Like other loans, subprime loans come in many forms based on the terms, loan amount and loan-to-value ratio you are looking for. In addition, companies will look at your credit and give you a credit grade, which will help them determine the best loan for your situation. With less than perfect credit, you can expect to pay higher interest rates because of the higher risk associated with making a loan to someone with a poor credit history.

VA loan - Borrowers who are veterans may qualify under Veteran's Administration guidelines. There is no mortgage insurance, but there is a one-time funding fee. The borrower must be a veteran and provide a Certificate of Eligibility. Up to 100% financing is available. VA loans can only be used for "owner occupied" properties, but you can use it over and over again, as long as each time a home gets sold the VA loan is paid off.