What if you can afford a more expensive home -- say one with a mortgage higher than $417,000?
You will need to have good credit and a down payment of at least 10 percent, but 20 percent is better, said Lueken, who is also president of 1st Advantage Mortgage in Lombard.
A credit rating should be 680 or higher, May said.
Such a loan also will cost more. The interest rate will be about a half-percentage point higher than a conforming mortgage, he said.
This is one area where second mortgages can be allowed, said Paul Diamond, executive vice president for sales at Flagstar Bank in Gurnee.
His company did a loan for a buyer in Chicago's Trump Tower for which the person got a conventional loan, and a second mortgage for part of the amount above the conventional limit.
Credit dings
Then there are those people who are going to find it very difficult to get a mortgage. Experts recommend their best choice is to work for a year or so to fix their credit rating.
Nonprofit agencies like the DuPage Homeownership Center in Wheaton offer advice on how to do this.
Subprime mortgages for people with bad credit have become scarce.
Etc.
It is difficult for people who have not established credit or cannot produce tax returns that reflect all their income to obtain mortgages.
Self-employed people can still get what are called stated-income mortgages without providing all their tax information, May said.
Good credit is essential, and the rates might be a quarter- to a half-percentage point higher than with conventional mortgages.
People who fall below loan guidelines for homeownership still have some options.
For example, through its House America program, Countrywide offers ways to count extra income and help people with higher-than-average housing expenses or debt.
Counties and other local governments also have programs to help low-income buyers.
Some of the now-disappearing loans for people without income they can document made sense, Lueken said.
For example, someone with a large down payment and cash in the bank but no current income, which can happen in divorces, could be a good risk, he said.
The mortgage association is trying to change Illinois laws that eliminate all loans for which borrowers do not have to prove their income.
Because of new state laws starting July 1, FHA borrowers will not be able to take advantage of easier methods to refinance into a lower rate, he said.
