In the face of rising interest rates, many lenders are now offering 100 percent home loans at near-market rates to conventional borrowers. These no-down-payment loans are generally targeted toward people with good credit (typically, FICO scores of 720 and higher) but not a lot of cash. This is in part because the two agencies that buy many of the loans lenders make, Fannie Mae and Freddie Mac, have shown willingness during the past couple of years to purchase mortgages with less money down than ever before. "We've been buying lower and lower down payment mortgages and we will buy 3 percent down mortgages at this time," Fannie Mae spokesman Clyde Ensslin points out.

To avoid private mortgage insurance (PMI) you can get zero down financing through a combination of a first and second mortgage, sometimes referred to as a piggyback loan, or by how the mortgages are split up (e.g., 80/20--80% first mortgage and 20% second mortgage), as long as the property is owner-occupied and if the borrower's debt ratio is 45% or less, and other requirements. There are other down-payment assistance programs for first-time home buyers offered by the Federal Housing Authority (FHA), the Department of Housing and Development (HUD) and other state and federal government agencies. Minorities and low-income families may be eligible for the American Dream Down Payment Initiative (ADDI), passed in 2003. ADDI allows eligible first-time home buyers to receive as much as $10,000 in down payment assistance. State housing departments and redevelopment agencies also offer grants and other assistance for first-time home buyers. Check your phone book or find them on the Internet.

Like other mortgages, zero down loans come in a variety of flavors, including adjustable rate mortgages (ARMs), which are variable interest rate loans, fixed interest rate loans, stated income and even interest-only loans. The best one to choose depends on your circumstances. For example, if your credit isn't that good, you may want to consider an ARM or interest-only loan then refinance once your credit scores improve. 100% loan programs are for home purchase loans only. You can't get one for a mortgage refinance. A home equity loan--home equity installment loan (HEIL) or home equity line of credit (HELOC)--taken out after securing the first mortgage also doesn't qualify under these programs.