 TITLE: First-Time Home Buyers: How to Qualify for Loans, Programs and Grants CONTENT: Additional Costs to Consider\n----------------------------\nThere are programs that can help you with your down payment and closing costs, but there are some other costs to consider as you determine your budget.\n*   **Mortgage insurance.** If you're applying for a conventional mortgage or FHA loan and your down payment is less than 20%, chances are that you'll have to pay some form of mortgage insurance. Private mortgage insurance (PMI) applies to conventional mortgage loans and can cost between 0.5% and 1% of your loan amount. With an FHA loan, you'll pay mortgage insurance premium (MIP), which includes an upfront payment of 1.75% of the base loan amount and an annual charge of 0.45% to 1.05%, depending on your base loan amount and down payment.\n*   **Homeowners insurance.** This covers you against losses and damage caused by various perils, including burglary, fires and storms. Cost can vary depending on where you live, but you can generally expect to pay around $35 per month for every $100,000 of home value. If you live in a flood zone, you may also be required to buy flood insurance.\n*   **Property taxes.** Your county, city or school district may charge property taxes to generate revenue. Property tax rates can vary depending on where you live, so check with your county assessor's office to find out your annual rate.\n*   **Homeowners association fees**: If your new home is within the bounds of a homeowners association (HOA), you'll likely need to pay an investment fee to join and monthly dues. Check with the real estate agent or HOA directly to find out the cost.\n*   **Repairs and maintenance**: Depending on the state of the home, these ongoing costs can be unexpected and regular or infrequent. As a result, it's wise to not use all of your spare cash for the down payment and closing costs. Instead, hold some back in an emergency fund in case you need it.\nGrab Your Tax Credit\n--------------------\nAfter you buy a home, you may be eligible for additional financial help. Your main mortgage charges interest. All homeowners, regardless of income, can claim mortgage interest as a deduction on their taxes. A deduction reduces your taxes based on your tax rate. For example, if you have a $1,000 deduction and you are in the 25% tax bracket, your deduction reduces your taxable income by $250 ($1,000 x 0.25%).\nAn even better deal is a tax credit. A tax credit reduces your taxes dollar for dollar. If you have a $1,000 tax credit, your taxable income is reduced by the full $1,000.\nIf you meet certain income requirements, you may be eligible for a mortgage tax credit that allows you to claim a credit on up to $2,000 a year in mortgage interest payments. If your mortgage interest is more than $2,000, you can claim the rest as a tax deduction. That means you can reduce your taxable income for the year by $2,000. To claim this credit, you must obtain a Mortgage Credit Certificate (MCC) from your state or local housing agency. END