Well the party is over. It used to be that you could get a loan package on a new home with nothing more than a heartbeat, and some people even found a way around that one. Lenders faced with an increase in delinquencies and foreclosures are tightening lending standards. With most of the sub-prime lenders taken out of the marketplace in the initial wave, a strong ripple is now working its way to the Alt-A segment. (As always please check out the definitions section of BestPickHomeLoans if you are unsure of meanings).

Alt-A loans were created specifically for people who were self-employed, ie those who did not have W2 wage statements. In the glory days of loose underwriting standards, many used this type, to inflate their earnings, improve loan ratios and qualify for higher loan amounts than they would have in a fully documented product type.

According to Inside Mortgage Finance, last year 13% of the $3 trillion in home mortgage oringinations were of the Alt-A variety. (20% were sub-prime). With the daily news of sub-prime players exiting the market, American Home Mortgage Investment the latest, it will be increasingly difficult to obtain a loan at decent rates.

However, this is still a big market and the industry is not going to die. They need you to take out loans. Here are some tips to help you going forward:

1) Shop direct. Lenders are becoming wary of taking on loans originated by brokers. The data has led them to believe that these loans are more likely to lead to defaults. Wells Fargo is charging brokers higher rates than if the loan is orginated in-house. The WSJ writes that Melissa Cohn, of Manhattan Mortgage, said Wells Fargo is charging 8% for a prime jumbo 30-year fixed-rate loan that carried a 6 7/8% rate late last week. It further reports that a Wells spokesman said rates are lower on loans made directly by the bank than on those through brokers. Make sure you comparison shop by going directly to a bank or credit union, ideally one which you already have some sort of banking/credit history.

2) Document. Be prepared to show all documents. For those of you self-employed this means showing all tax records, bank statements, receipts. The more you can do to achieve full documentation the better your chances for getting a loan.

3) Increased Down Payments. Lenders will want to see that you have an increasing amount of skin in the game. It will be increasingly harder to purchase something with nothing down. About 25% of homeowners do receive help from relatives when purchasing a home or down payment assistance.

While it is harder to get a loan, with these tips you are sure to do well.