Imagine the poor high school senior who gets into college only to have the admission revoked for a bad grade in the final semester. It happens.

A similar last-minute denial can afflict the would-be homeowner expecting approval on a mortgage application. All the criteria are met and everything seems to be going just fine. Then at the last minute the loan officer phones with a nasty surprise: you've been rejected.

The reason? A pile of fresh debt, such as credit card bills. In fact, any significant change in the applicant’s financial situation could derail a loan approval, even a change in job. Sometimes it only takes a small change in circumstances, just enough to move the applicant’s borderline credit score down a notch.

This has long been the case, but chances of getting torpedoed this way have recently grown. Fannie Mae (Stock Quote: FNM), the government-sponsored firm that sets standards for most mortgages, has gotten tougher. As of June 1, lenders are required to take a final look at applicants’ finances just before closing the deal.

The idea is to reduce the number of loans to people less likely to repay, a key factor in the financial crisis that led to the government takeover of Fannie Mae and Freddie Mac (Stock Quote: FRE).

Sprucing up your credit standing before you file the application is obviously a key step that will also help avoid a last-minute denial. Also, in the months before filing an application, do everything you can to reduce your existing debt. Pay off credit card balances and avoid new charges. Keep the old car running, or, if you must replace it, pay cash rather than take out a loan. Even a car lease, or co-signing a lease for someone else, can hurt your credit. Use the Credit Card Payoff Calculator to devise a good strategy.

Next, build up a good rainy-day fund so you won’t rack up credit card bills if you have an unexpected expense. It would be sad to lose out on a new home because you suddenly had to fix the roof or air-conditioning system to sell the old one.

Of course, you can improve your chances of getting any loan by borrowing less. The Maximum Mortgage Calculator will show the maximum amount you are likely to get based on standard debt-to-income ratios. If you apply for the maximum, any tiny change in your credit score, credit rating or debt load could cause a problem. You also could be derailed by a small increase in the loan rate, which could lift your payment above the maximum allowed.

In times past, lenders didn’t sweat the small stuff. Now they do, as they worry about greater scrutiny from regulators, credit ratings agencies, Wall Street analysts and lawmakers.

Lenders want a comfortable margin for error, and borrowers have no choice but to comply.

Fortunately, interest rates and home prices are at a low ebb. Chances are you can still get a pretty good home even after trimming your spending limit.

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