You have your money together for a down payment. You've gotten preapproved by your lender. But if you have less than 20% for a down payment, you may not get your loan if you live in certain states. Because it's not just Fannie Mae or Freddie Mac approving you for your mortgage. There will also be a mortgage insurance company involved.

Mortgage Insurance (MI) companies have taken a beating lately. They are the ones who have to pay the lender when a borrower defaults on and the proceeds from the sale of the property don't cover the balance of the loan. So MI companies also have a say when it comes to who gets a loan and who doesn't.

Mortgage Guaranty Insurance Corporation (MGIC) is one of the largest mortgage insurance writers out there. And MGIC's definition of what makes a borrower's file acceptable has tightened up considerably. For example, you can get a loan to 95% of the home's value--if your credit score is over 700 and you don't live in AZ, NV, CA, or FL. These are called restricted markets and you can only get a 90% loan and have to have scores exceeding 720.

So even perfect borrowers face restrictions in today's markets. And less-than-perfect borrowers face even more. Your best bet is to check with both conventional lenders and FHA lenders before deciding on a loan. Compare the fees, the costs of insurance, and see which you can get approved for and how much it's gonna cost you. A lender approved to do both conventional and government loans could make comparing a lot easier.