Also, make sure to include all the income you have. If you have any equity in any stocks or other financial accounts, make sure to mention that to the broker as well.

The more money you can put down on the loan, the more likely it is that you can get approved. FHA loans usually only require 3-5% down. They are also usually open to working with people with credit problems.

Why interest only?  Interest only home loans may be appropriate for a person who earns a lot of income through commissions or bonuses. If a buyer believes that his/her income will be significantly larger in the future an interest only loan might also make sense. An interest only home loan could work well for the home owner who really invests or saves the money not spent on a house payment.

The advantages - A home buyer may be able to purchase a larger home. The borrower can still deduct the interest from his/her taxes. The money not spent on the principal payment can be invested or saved.

The pitfalls - Interest only home loans are for a specific and generally short duration. At the end of that time the buyer will be expected to pay off the loan, to begin making conventional payments or to refinance the loan. The home is not building equity. A slump in home prices can make the mortgage due more than the value of the home. If the income or credit of the buyer deteriorates he/she may not be able to pay the mortgage off or refinance the loan.

Although tantalizing, interest only home loans are for a select few home buyers.

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The average rate of interest on mortgage loans continues to fall and has been under 5 percent for almost all of this past year, with this recent round of rate cuts seen as the lowest for borrowers in years. The reason, many borrowers today have bad or at least less than perfect credit scores. Still a borrower with less then perfect credit an jump through a few hoops and get a fairly decen rate on a loan.