Years ago, most people felt they had to make at least a 20% down payment in order to obtain a mortgage. Today, mortgages in excess of 95% of the purchase price are not unusual.

Oftentimes, the greatest difficulty for a purchaser is not making the monthly housing payment but rather raising some sort of down payment. Recognizing that many applicants are "cash poor" with good income, lenders have become increasingly aggressive in making high loan-to-value mortgages (i.e., a very high percentage of the purchase price is financed; also known as, "highly leveraged").

The biggest loophole in the American tax system, arguably, concerns deductions on home ownership. Not only are real

estate taxes deductible, but the interest on the mortgage is usually as well. Indeed, the higher the mortgage amount, the higher the tax deductions. Therefore, increasing the amount which is borrowed is the generally preferred way for high income earners to reduce their income taxes.

While you may qualify for one of these high LTV programs, bear in mind what makes financial sense does not always translate into sleeping well at night. Most people, tax deductions aside, sleep better at night having a modest mortgage.

If your investments, are doing well or you expect them to do well, you probably are best served by limiting your down payment to a modest amount. On the other hand, if you are approaching retirement or if you are conservative with respect to housing risks, you may wish to forsake tax deductions in favor of a more modest mortgage amount and, thereby, lower your monthly mortgage payments.

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