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What does it take to qualify for a mortgage these days?

There's much less wiggle room in mortgage terms in the newer, tighter era of lending. So it's essential that a borrower has a reasonable level of debt, a down payment and good credit.

Maureen Polster, residential mortgage manager at Fidelity Bank in Dunmore, described the legs of the mortgage qualification stool.

One is the loan-to-value ratio, the amount of the requested loan relative to the appraised value of the property. The ideal is to borrow 80 percent of the home's value. In most cases, that requires a 20 percent downpayment, or a home sold below its appraised value. Anything less would require private mortgage insurance (PMI), an additional monthly charge that protects the lender in case of default. Even the most generous federally-backed mortgage programs require at least 3 percent down.

Holden Lewis, a senior mortgage analyst with, said down payment protects lender and borrower. It protects the lender, somewhat, in the event of a default because they are more likely to recoup the principal balance on the loan. But it also protects the homeowner, insulating them from the financial impact of fluctuations in the market if, for example, the homeowner must sell when the market is at a down level.

"A downpayment gives you built-in money that keeps you above water," he said. "So if you relocate and have to sell into a down market, you can do it."

Credit score is also important, Ms. Polster said. A score of 620 is the lowest at which someone may qualify. A less-than perfect credit score will probably require additional points be paid, rather than a higher interest rate. Those with a score of over 700 are in good shape.

Then there's debt-to-income ratio, which considers total household income relative to total debt with the new mortgage. The total monthly payment of all credit card, car loans, student loans and other debts may not exceed 45 percent of income.

"These tighter restriction are not designed to give people a hard time," Ms. Polster said. "The rules attempt to protect the borrowers by giving mortgages to those who can afford to them."

The most common stumbling block would-be borrowers encounter, Ms. Polster said, is wanting a pricier home than their budget can realistically handle. The other is credit problems, maybe a forgotten collection of a medical bill or a long-delinquent account.

People with the goal of homeownership should plan far in advance, Ms. Polster said. They should review their credit reports at least yearly to make sure they are accurate and pay off any delinquent accounts. Often credit reporting agencies confuse accounts between father and son or other people with the same name. In the months before applying for a mortgage, home buyers should refrain from opening new accounts or adding to existing revolving debt. That could ding your credit score.

Those looking at entering the home market have to plan ahead, said Jesse Ergott, NeighborWorks Northeastern Pennsylvania, a Scranton nonprofit that provides home buyer education and assistance to those facing foreclosures.

At least six months before, home buyers should get to work on improving credit and start saving - not just for a down payment but for the other expenses that arise from home ownership.

"A wave of people who purchased homes in the last decade couldn't afford it in the long-term because they didn't understand the process," he said. "If you have savings, the credit score, and enter home ownership responsibly, then this is the best time ever to get into the market and buy a home."

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