[MrMon]

I don't do mortgages but as a real estate agent I can tell you what I advise and see here in the midwest with first time buyers.

1. Virtually no one I work with gets a 30-year fixed. 10% tops. Some sort of ARM is almost always the norm, interest only works as well. This is especially true with 1st time buyers, as they know they won't be in the house that long. 5 and 7 year are very popular.

2. Paying points to buy down a rate is almost always a fools game. One mortgage pro I know says she can think of almost no scenario where it's a good move.

3. Your problem is debt-to-income ratio, yet you're putting 20% down. I know, avoid the PMI. But could you go to 10% down and significantly alter that ratio? Would that make a difference? 80-10-10 loans are pretty good as well, and lenders like Cendant will simply alter the interest rate on a less than 20% down load, making PMI deductable.

4. Not an option people want to hear, but the Bank of Mom & Dad is sometimes useful if available. Co-sign or paydown of debt through a "gift" is often a popular way to get ratios in line.

5. Right now your first priority should be lining up something to avoid losing the house, unless you have some escape clause in the contract that you want to use. Liquidate assests if you have to, sell the Porsche, stocks, collections, etc. (The HI vacation with a debt ratio like that was probably not a wise move, but what's done is done.) Find cash, borrow from retirements funds if that is an option, win more at poker fast, or cash-in your bankroll, etc., etc.

Without more specific numbers, that's as good as I can do, but it does appear that you can do some things, however unpleasent they may be. It's a sign of growing up, when you have to sacrifice things for the sake of a house.

Good luck.