Buyers capitalize on low down payments

As the spring home-buying season begins, financing options remain available for borrowers that do not have the traditional 20 percent down payment.

"Even with home prices declining in many areas, many families still find it difficult to accumulate a 20 percent down payment," said Suzanne Hutchinson, executive vice president of the Mortgage Insurance Companies of America.

"Low down payment insured loans are a key financial tool in the overall effort to keep the dream of homeownership alive in a volatile market."

Although the real estate market is tumultuous, there are still safe, predictable and responsible financing options for buying a home, experts say.

And Congress is helping many buyers with a federal income tax deduction for mortgage insurance premiums on home purchases or refinancing starting in 2007.

This is the first-ever tax deduction for government and private mortgage insurance and it was extended through 2010 as part of the Mortgage Forgiveness Debt Relief Act of 2007.

The deduction allows households with an adjusted gross income of $100,000 or less to deduct the full cost of their government or private mortgage insurance premiums on their federal tax returns. Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction.

On average, the tax break could be worth $350 per taxpayer.

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