Keep in mind that from mortgages to car loans, your credit history and score matter more than they did prior to the crunch. Rates are at rock-bottom levels for borrowers with top-tier credit — generally credit scores above 720. Before you shop rates, get your credit reports at and check for errors. And buy your credit score from Equifax for $7.95 . That way you can see where you stand before you apply for a loan

Mortgages: Stricter Rules

Mortgage lenders want to make loans now, and they may even bid against one another for your business. But lending standards remain tight, and you must be prepared to produce a mound of paperwork to document your income and assets.

Rates are as low as they were in the 1950s, so going through the motions could pay off. In mid September, the average interest rate for a 30-year, fixed-rate conforming loan — a mortgage of $417,000 or less — was 4.5%, according to HSH Associates, a mortgage-tracking firm. The initial rate for a 5/1 adjustable-rate mortgage (a fixed rate for five years, followed by annual adjustments) was 3.6%.

Fannie Mae, Freddie Mac and the Federal Housing Administration continue to dominate the mortgage market, setting the standards for the loans that lenders make and sell to investors. So lenders strive to dot every i and cross every t when they qualify you.

If you’re buying or refinancing the mortgage on your primary home, you’ll need a minimum down payment of 5% to 10% for a conforming loan or 10% to 15% for a conforming jumbo loan (125% of a metro area’s median home price, up to $729,750). With 20% or more down, you avoid private mortgage insurance, which typically costs 0.5% to 1.5% of your loan amount per year.

Fannie Mae and Freddie Mac allow a minimum credit score of 620 if you have at least 25% equity in the property or a score of 660 with equity of less than 25%; you’ll get the best rate if your score exceeds 720. The FHA will soon require a minimum credit score of 580 to qualify with a down payment of 3.5%, but FHA lenders often impose a higher minimum score of 670.

In addition to your credit, lenders will also scrutinize your ability to pay, starting with your ratio of debt to income. Monthly housing expenses (principal, interest, taxes, hazard insurance, private mortgage insurance and association fees) shouldn’t account for more than 28% of gross monthly income. Total debt shouldn’t exceed 36% of gross income, but in some cases lenders stretch the maximum to 45%.

Chris Bennett, a loan officer with HomeServices Lending, in Charlotte, N.C., says that he surprises borrowers “all the time” with preapproval of their loan when they aren’t expecting it. Even people with lower credit scores may qualify if they have stable employment, a history of paying rent and credit lines on time, and money in the bank or in a retirement account.

However, Bennett also counsels some borrowers to delay their home purchase long enough to improve their credit score, eliminate debt, get a raise and save more money. They might earn a better interest rate, improving their buying power. Plus, he says, “it’s not good to lay out every bit of cash you have if you won’t have money for a rainy day.”

Prove it. At a minimum, you must supply your pay stubs for the past 30 days and W-2 forms for the past two years. Lenders will want to see bank, retirement-account and investment statements for the past 60 days. Bennett says three types of borrowers will face additional requirements:

If you’re self-employed or if 25% or more of your income is from commissions or bonuses, you must provide two years of tax returns. Lenders will average your income over the past two years to figure your debt-to-income ratio.

If you have pursued opportunities to reduce your taxable income, you may not have sufficient income to qualify even though you may have a lot of money in the bank. Community banks, credit unions and other lenders that typically keep their loans on their own books are the best bet for borrowers with low incomes and high assets, says Bennett.

If you want to rent out your home and buy a new one, you must provide a signed lease for a minimum of 12 months. You can use only 75% of rental income to help qualify for the mortgage, and you must have at least 30% equity in your former home.

If you and your spouse are relocating for work and your spouse doesn’t have a job yet, you must qualify for the loan based on one income unless your spouse has a signed agreement with an employer to begin work within 45 days of closing the loan.

Even if you qualify, you can throw a monkey wrench into the final loan approval if you take on new debt that could affect your credit score or your debt-to-income ratio. Some lenders pull another credit report just before closing. Another possible sticking point is the appraisal. Overly generous appraisals helped to fuel the housing bubble.

Now, miserly ones may thwart your closing, says Guy Cecala, publisher of the newsletter Inside Mortgage Finance. Lenders will estimate the value of your home conservatively, and appraisers are generally following suit, especially if the local market is in flux.

The owners of Twilight Bistro are hoping to expand, but they said the market for loans is still tight.

“They want as much assets as what it is worth,” Twilight Bistro owner Joe Anglin said. ”If I had that I’d just buy it.”

Anglin said part of the problem is, the business is not only small, but new.

“We’ve been here less than two years, and our track record does show a profit, but still with only two years and not a lot of assets, we expected to be told no,” Anglin said.

“The greater the risk, which often comes in smaller start up companies, the harder it is going to be to get those dollars,” Tricia Hollander with Hillyard Lyons said.

Still, Hollander said there are more dollars to be had, and credit is starting to ease up.

“We tend to see the pendulum swing,” Hollander said. ”I think maybe we’ve swung so far in one direction that at some point we’ll come back to the middle.”

She said new credit card rules that took effect Monday don’t apply to businesses, but that exemption could have an impact.

Some banks may try to make up lost revenue on the backs of businesses, and some businesses may put their credit on personal cards.

That makes financial institutions nervous.

“That becomes a little bit of a muddy issue when businesses take on personal liability, so that is a concern,” Hollander said.

As for Twilight, they said their best bet for a loan right now is the small business administration.

They said the wait could be a little longer, but they believe it will work out in the end.

Hollander said some small businesses are avoiding expansion right now anyway because they are focused on getting their financial house in order.