Your down payment is paid in cash and is not included as part of the loan amount. The bigger the down payment, the smaller your loan, and the smaller your monthly payments. How much you'll put down depends on the cash you have available and the amounts you'll need for closing costs, prepaid property taxes and homeowners' insurance.

Mortgage plans have various down payment requirements and they can range from 0% down , with or without VA – Veterans Administration Loan - to between 3 and 5% down on a FHA – Federal Housing Administration Loan - to 20% down, the traditional amount for a conventional loan. In addition, special state programs for first-time homebuyers may set different sums, which are usually lower than conventional financing.

If you put less than 20% down on most loans, you'll be asked to protect the lender by carrying private mortgage insurance (PMI). Carrying PMI ensures that the debt is repaid if you default on the loan. This adds approximately an extra half a percent onto the loan. PMI is required until the ratio of loan amount to value of the home is at least 20%. FHA mortgages, in return for their low-down-payment requirements, also charge for mortgage insurance premiums (MIP). There are creative mortgage plans that don’t require any PMI – a good loan officer will tell you all about them!

• Income:

When you apply for a mortgage loan, the first question will likely be "What's your monthly gross income?" Lenders consider the income of all parties who will be owners of the property. Be prepared to provide a monthly accounting of all sources of income and have ready last year’s tax returns and W-2s.

• Outgo:

Lenders are interested in your present monthly payments because they want to be sure you can handle the mortgage payment on any loan they approve for you. Different mortgage plans consider payments on any debt that won't be paid off within, for example, six months, nine months, or a year.