Good credit? Home loans no longer a sure thing

— -- Jonathan Schecter is set to close next month on the purchase of an apartment in New York City, but it's been an adventure getting there.

He began home-shopping a year ago. Schecter's lender said in September that he could count on 80% financing up to $420,000. The other 20%, or $105,000, would come from Schecter's down payment. But things changed after he committed to buy a place on Manhattan's Lower East Side. The bank said it would finance only $393,000, increasing the down payment he needed by $27,000.

He scrambled to come up with the extra money and managed to hang on to the place.

"It was trying to get the mortgage that was hard," Schecter, 25, a senior manager at a marketing and public relations agency, says of his home-buying experience in the rough-and-tumble Manhattan market.

This is the new, dynamic landscape of mortgage lending today — a world in which even those with good credit are having trouble getting mortgages or the loan terms they want. At a time when politicians and economists are trying to find ways to help Americans buy more homes to reduce the bloated inventories that are causing real estate values in most cities to fall, the mortgage market is undergoing tumultuous changes.

The credit crisis has led lenders to abandon the freewheeling practices that fueled no-money-down mortgages during the past decade and helped fuel the run-up in home prices that peaked in mid-2006.

Compared with the boom years earlier this decade, far fewer buyers are using adjustable-rate mortgages. Lenders generally are requiring much higher down payments, often around 20%. Interest in loans guaranteed by the Federal Housing Administration (FHA) is surging as borrowers accept the government agency's tight restrictions in return for down payments as low as 3%.

"Jumbo" home loans — those for more than the limits set by federally controlled investors Freddie Mac and Fannie Mae — are especially difficult to get, because many private banks no longer are investing in them. Such loan limits range from $417,000 to $750,000, depending on the local market.

Buyers — and properties — are going through extra scrutiny.

In some cases, lenders are requiring a second appraisal to boost their confidence in the value of a property. And on top of everything else, a wave of financial institution consolidations has led to confusion and delays in the mortgage process across the nation.