In a few weeks time we will have been in SD (and the USA)for a year. How time flies when you are having fun.

We have been renting in CV and have a really good feel for the area.
We have looked at many houses, the kids are settled in school and this is where we will be staying.

Our credit scores are where they need to be and we can now qualify for an asset based ARM (5/1 , 7/1 or 10/1) based mortgage as we have no proof of income that would allow us to get a 30 year fixed.

One of the reasons to look at buying now would be to take advantage of the low rates if one can get them, the ARM deal does not excite me specially seeing that rates are not likely to move down.

Given my OP and the above do we just continue renting at a premium until such a time that we can qualify for a fixed 30 year probably at a higher rate than one can get now, or just accept the conditions of the ARM deal for now and refinance once we are able to qualify for a fixed deal?

Also, is the general rule of thumb to put down as little as possible to get the loan deal that you want and use the remaining capital to invest elsewhere for a better return?

I am not sure I could easily get the 5.8% investment return that the ARM deal would be charging me so rather put the highest amount possible down (50%+) and only pay interest on a smaller loan?

How does the mortgage interest tax deduction factor into all of this?

Would your recommendation change if we were able to get a 30 year fixed at a decent rate?

Sorry for all of the questions but coming from a country where interest rates were through the roof, cash was king and if possible you never took out loans for anything, this is all very new to us.