6 things to do before you buy a home

"It's a brave, new world with respect to credit requirements for mortgages," says John Ulzheimer, president of consumer

education at smartcredit.com and formerly of FICO, which pioneered credit scoring.

One old rule still applies: The higher your credit score, the lower your down payment and monthly payments.

"Below 660 or 680, you're either going to have to pay sizable fees or a higher down payment," Zigas says. And that's

pretty much the cutoff score for getting a mortgage, he says.

Vicki Bott, deputy assistant secretary for single-family housing at the Department of Housing and Urban Development,

says that her office has noticed much the same thing. "While there are many qualified borrowers in the 580 range, the

market today is probably (looking for) 640 to 660, at a minimum," Bott says.

On the other end, a score of 700 to 720 will get you a good deal and 750 and above will garner the best rates on the

market, Ulzheimer says.

Improve your chances by: pulling your credit reports and ensuring you're not being unfairly penalized for old, paid or

settled debts, Zigas says.

Stop applying for new credit a year before you apply for financing. And keep the moratorium in place until after you close

on your home, Ulzheimer says.

The buyer's mantra: Get a home that's financially comfortable.

There are various rules of thumb that will help you get an idea of how much home you can afford. If you're using FHA

financing, as almost one-fifth of buyers get FHA-insured loans, your home payment can't exceed 31 percent of your

monthly income. But, with some mitigating factors, FHA will let you go higher.

For conventional loans, a safe formula is that home expenses should not exceed 28 percent of your gross monthly

income, says Susan Tiffany, director of consumer periodicals for the Credit Union National Association.

For a rough assessment of how much house you can afford, check out Bankrate's new house calculator.

Improve your chances by: trying on that financial obligation long before you sign the mortgage papers, says Tiffany.

Before you home shop, calculate the mortgage paymentfor the home in your intended price range, along with the

increased expenses (such as taxes, insurance and utilities). Then bank the difference between that and what you're

paying now.

Not only does it allow you to build a nice nest egg, but "you can back away from it," or scale back, if the payments start to

pinch, she says.

Depending on your credit and financing, you'll typically need to save enough money to put anywhere from 3.5 percent to

20 percent down.

If you're using FHA financing, then you need a score of 500 or higher. And in the 500 to 579 range, if you can find a lender,

you'll have to put 10 percent down instead of 3.5 percent.

One exception: Veterans Affairs loans, which require no down payment.

Another cash expense: closing costs. Whatever your loan source, you'll also need money to pay closing costs, which run

(depending on where you live), from $2,300 to $4,000. Get the average closing costs in your state at Bankrate's closing

costs map.

Improve your chances by: Along with banking your own money, search out down payment assistance, Tiffany says. Often

it's location-based or tagged to a certain type of buyer, like first-timers, she says. So do an Internet search with the city

name, then the county name, along with word combinations such as "down payment assistance," "first-time

homebuyers" and "homebuyer's assistance."

In a buyer's market, you can also negotiate to have the seller pay a portion of the closing costs.

This is over and above your money for the down payment and closing. Your lender wants to see that you're not living

paycheck to paycheck. If you have three to five months' worth of mortgage payments set aside, that makes you a much

better loan candidate. And some lenders and backers, like the FHA, will give you a little more latitude on other factors if

they see that you save a cash cushion.

That money will also help you with maintenance and repair issues that come up when you own a home. While repairs

are sporadic, items such as a new roof, water heater or other big-ticket items can hit suddenly and hard.

Improve your chances by: setting aside money every month. A good rule of thumb: on average you'll spend 2.5 percent to

3 percent of your home's value annually on upkeep, repairs and maintenance, says Joseph Gyourko, chairman of the

real estate department at the Wharton School of the University of Pennsylvania. If you're buying a $250,000 home, aim to

bank $520 to $625 per month.

For serious home shoppers, "the No. 1 thing is they better have everything in order," says Dick Gaylord, past president of

the National Association of Realtors. That means that, before the real home shopping begins, you want to get financing

in place, he says.

And the preapproval process is "much more extensive" than it was a few years ago, he says.

Bott agrees. "That documentation around income and assets is very essential, more so than in the last five years," she

says.

Improve your chances by: getting financing in place "before you walk through the first house," Gaylord says. Otherwise,

he says, "How do you know how much you can afford?"