Not only is it harder to get a home loan today than it was during the height of the housing boom when lending standards went out the window, but it is also harder to get a loan today than it was before the boom, when mortgage underwriting was relatively conservative.

That is, according to a new report from the Urban Institute. How much harder? Researchers there claim that 4 million more loans would have been made between 2009 and 2013 if lenders had used the same standards as were used in 2001. "The borrower's FICO score has become much more important in terms of who can qualify," said Taz George, a research associate with the Urban Institute. FICO measures a borrower's creditworthiness. 

The report looks specifically at FICO scores (borrowers' credit ratings from a low of 300 to a high of 850, as gauged by Fair Isaac Corp. and commonly used by lenders).

Less than 40 percent of borrowers in 2013, using their loans to purchase a home, not refinance, had FICO scores below 720. In 2001, more than half did. "When you look at more moderate credit score borrowers, those with a FICO of between 660 and 720, that's a score that in a year like 2001 we would consider eligible for a purchase mortgage, but today we see a 37 percent decline in the number of loans in that category," said George. 

As for why the credit box remains so tight, the report points to lenders adding to credit standards because they are so worried they might be forced to pay back any loans that default. This so-called repurchase risk has been at the heart of credit tightening, since banks were forced to pay back billions of dollars in bad loans during the foreclosure crisis. Banks are also worried about litigation and the high cost of servicing troubled loans.

The government, however, is trying to ease the credit crunch. Federal regulators for mortgage giants Fannie Mae and Freddie Mac have sought to clarify repurchase risk, while the FHA, the federal insurer of home loans, recently lowered mortgage insurance premiums. There are low down payment options. "When it comes to mortgage credit availability, we believe the government has turned the corner and is now trying to encourage the expansion of credit rather than the contraction of mortgage availability," noted Jaret Seiberg, a managing director of Guggenheim Partners. 

The steps, however, are small, but Seiberg points to regulators reducing costs for lenders as well as Secretary of Housing and Urban Development Julian Castro looking at new credit scoring models for FHA borrowers. FICO is also working on a new scoring model that could widen the credit box. 

The problem though, argue some, is not tight credit but a still lagging economy.

"What the researchers are not really looking at is that although credit looks like it's tighter than it's ever been, the fact of the matter is that income is lower than it's been in a long time," said Anthony Sanders, a professor of finance at George Mason University who claims credit is no tighter than it was in 2001. "Therefore there are a lot fewer households that can even qualify for a loan, so they're not even applying."

"We found evidence that many low credit borrowers have been deterred from even applying for a loan in the first place," George conceded,  It seems that a bigger factor in today's housing market than a FICO score is debt. The ratio of debt to income is closely watched by lenders today, as it was 15 years ago. It hasn't changed, but potential homebuyers today are facing higher levels of debt, especially first-time homebuyers. Younger Americans have substantially more student loan debt than they did decades ago.

 If you're seeking the best deal on a mortgage, you'll need to give your credit some serious attention.

Your credit report and score are two essential elements used by mortgage lenders to decide whether you'll be approved for a mortgage. The information found in your credit report is used to calculate your credit score. And a higher score reflects a strong credit history and can make you eligible for the lowest possible mortgage rates.

"Generally speaking, having a high FICO Score makes it more likely a consumer will qualify for favorable loan terms," says Jeffrey Scott, spokesperson for the Fair Isaac Corporation (FICO).

Lower mortgage rates mean a lower monthly payment and lower interest payments over the life of your loan. In other words, you can save some major cash by improving your credit before you apply for a mortgage.

Here are eight ways you can give your credit a boost to get the lowest mortgage rates:

No. 1: Know where you stand

Your first stop on the path to a better mortgage deal is creating a baseline. You have to know where you stand in order to improve. Get started by running your credit reports and getting your credit score.

"Managing a good credit score should be approached like an annual health exam: It is important to do this at least every year, and more frequently, if there is a change in financial condition," says Rich Arzaga, CFP, founder and CEO of Cornerstone Wealth Management in San Ramon, California.

No. 2: Learn how your score works

While you have a variety of credit scores, your FICO score is used by "90 percent of top lenders when making lending decisions," according to myFICO.com, the consumer division of FICO.

Your FICO score is calculated using both positive and negative information in your credit report. The data breaks down into five main categories:

1. Payment history: 35 percent
2. Amounts owed: 30 percent
3. Length of credit history: 15 percent
4. New credit: 10 percent
5. Types of credit used: 10 percent

Every lender establishes its own criteria with regard to underwriting new loans and managing existing loans, says Scott. And credit scores are typically one factor among several that lenders consider when making decisions.

No. 3: Fix errors

Fixing errors on your credit report is a crucial step that can dramatically improve your score.

Michael McNamara, regional vice president for United One Resources in Wilkes-Barre, Pennsylvania, which provides rapid rescoring services for mortgage lenders, says he's seen a credit score increase by 40 points from one late payment correction.  If you find errors on any of your reports, dispute them immediately with the appropriate bureau, says Scott. 

The first step, notes myFICO.com, is to inform the responsible credit bureau of the inaccurate information. Your dispute letter to the bureau should include copies of supporting documents, clear identification of the items you're disputing, why you're disputing the information and a request to delete or correct the error. Circle the disputed items and send the letter by certified mail.

Next, do the same with the creditor or information provider, and explain why you're disputing the item.

Unless they consider the dispute to be frivolous, credit bureaus are required to investigate the dispute, which usually happens within 30 days, notes the Federal Trade Commission.

No. 4: Eliminate disputed accounts

Credit report errors that have been disputed are labeled as disputed accounts on your credit report. And those disputed accounts have to be closed before you apply for a loan.

Disputed accounts are not factored into the overall credit profile, notes Kurt Johansson, senior loan officer for Shelter Mortgage Company in Nashville.

To ensure mistakes are corrected as quickly as possible, it's important to contact both the credit bureau and the lender, bank or creditor that provided the information to the bureau, notes Scott. "Both these parties are responsible for correcting inaccurate or incomplete information in your report under the Fair Credit Reporting Act," says Scott.

No. 5: Pay down your debts

"Keeping your balances low can have a positive impact on your FICO Score," says Scott. That's because your "Amounts Owed" category accounts for around 30 percent of your FICO score.

If you can swing it, paying down your credit card debt balances to at least 30 percent of your total limit is an easy way to give your score a bump, notes McNamara. "In most cases, paying down revolving unsecured debt provides a positive impact on the credit scores, especially on files that have a high utilization ratio, thus allowing borrowers to obtain a better rate on their mortgage," says McNamara.

No. 6:  Pay bills on time

Late payments and collections leave major blemishes on your credit report, according to myFICO.com. And once you have a delinquent payment, there's not much you can do about it.

Paying your bills on time and avoiding late payment is the only way to keep a positive payment history. And the only way to improve upon a payment history is by annually reviewing your report to keep a look out for, and correct, possible errors, says McNamara.

"Credit scores are slow to improve, but very quick to drop if late payments are recorded," says Arzaga.

Johansson says that in addition to bankruptcy, foreclosure and judgments, collections and habitual late payments are the worst things to see on a credit report.

No. 7: Use credit wisely

Scott says there are three golden rules for maximizing your FICO score:

1. Pay all bills on time, every time
2. Keep balances on credit cards low
3. Apply for credit only when you need it

"Do not over extend yourself," says Arzaga. "If your goal is to improve your credit score and qualify for better rates and terms, then manage your household cash flow," he says. Having better household cash flow will reduce the risk of late payments.

Another tip: Keep revolving credit card accounts to a minimum. Johansson says that seeing several revolving accounts on a credit report is a subtle red flag and, in some cases, can show the potential for overspending. 

No. 8: Don't close accounts

This is a little tricky, says Arzaga. "On the one-hand, lenders do not want to see a lot of open credit. On the other hand, they would like to see some type of ratio of open credit to credit used."

But in general, it's never a good idea to open or close accounts prior to applying for a mortgage loan, says Johansson. It can negatively impact your score.

One way that closing an account can impact your credit score is the credit utilization calculation.

"If the balances on their remaining credit cards remain the same, then the consumer's utilization rate will increase. This may lower their FICO Score," says Scott.

The bottom line

Undeniably, it's always important to go into the mortgage process with the best potential credit position. Just make sure to give yourself ample time to find and correct credit report errors. As Arzaga says, it could take months.  "Doing this clean-up in advance will also speed up the mortgage process," he says."

You can really improve your outlook of getting the lowest possible mortgage rates by paying your bills on time, keeping account balances low and using credit wisely.

Hurdles to buying continue to dog renters 

Even though buyers in most markets can break even on a home purchase in less than two years, nearly half of renters in a newly released survey said their credit or finances keep them from buying a home.

Of renters surveyed by Zillow Group (Z), 16% said they can't qualify for a home loan, 18% said they can't afford taxes, maintenance and other costs associated with homeownership, and 13% said they don't have enough savings for a down payment. About a quarter said they struggle to pay their rent.

According to the survey, 82% of renters are long-term renters, and 57% are long-term renters who have lived for a long time in the same home. Just 14% of renters said they aren't staying long enough in the same place to buy. 

Zillow's survey sheds light on why some renters are not buying homes, despite historically low interest rates, prices that remain below peak levels in many areas and rising rents. Mortgage math aside, 20% of renters said they simply prefer to rent. "If the buy versus rent decision were about simple math, we'd likely have millions more homebuyers in the market, because the equation is tilted heavily in favor of buying," said Zillow Chief Economist Stan Humphries. "But no matter what the numbers say, buying a home is a huge commitment. Every day, Americans make decisions to buy or rent based on any number of personal dynamics, including preference, flexibility needs, family factors and, yes, financial considerations. There is no right or wrong choice, and it's important that America's housing market maintains a number of affordable options for renters and buyers, no matter their preferences."

Over the last year, as home-price appreciation has slowed down, the length of time it takes to break even on a home purchase grew slightly in most major metros.  The breakeven analysis looks at how long it takes to come out ahead on a home purchase versus renting the same home, recouping the costs of buying, including taxes and maintenance.

Among the top 35 metro areas in the U.S., Dallas-Fort Worth had the lowest breakeven horizon, at 1.2 years. Indianapolis, Ind. and Detroit were next at 1.3 years. The highest breakeven horizons were in Los Angeles, at 5.1 years, Washington D.C. (4.2 years) and San Diego (3.8 years). That national average is 1.9 years.

Zillow's breakeven horizon incorporates all costs associated with buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities, maintenance, and renovation costs. The horizon also factors in home equity growth, for buyers, and, for renters, income earned if they invested the same amount of money into an interest-bearing account. It also factors in historic and anticipated home value appreciation rates, rental prices and rental appreciation rates.

Over 7 million borrowers could benefit from a refinance today, according to data released from Black Knight Financial Services. In their monthly Mortgage Monitor Report, Black Knight reports the number of potential refinance candidates currently sits at 7.1 million, a substantial increase form just 4.1 million potential borrowers in February 2014. However, Black Knight's SVP of Loan Data Products, Trey Barnes, says that number is fragile. According to Barnes, any increases in mortgage rates could cause that number to drop, even marginally.

"Of course, this population is rate-sensitive; in fact, it was largely the decline of 60 basis points in the prevailing 30-year interest rate that resulted in the year-over-year increase in potential refinance candidates," he said. "Likewise, if interest rates were to rise by just half a percentage point, three million borrowers would fall right back out of the running as far as benefiting from refinancing their mortgages. Another interesting finding from this analysis: prepayment speeds (historically a good indicator of refinance activity) of lower credit score borrowers - those with scores below 620 - are the lowest we've seen since starting to track this data in 2000. As a result, the average loan age for this group is 98 months, as compared to just 38 months and less for borrowers with credit scores of 750 and above."

The report also used the Black Knight Home Price Index to examine the makeup of 2014 residential real estate transactions. Traditional market sales outpaced 2013 levels and hit their highest level since 2007, although overall real estate sales were down for the year due to a decrease in distressed transactions.

Year-over-year home price appreciation rates are leveling off for both "bubble states" and the nation as a whole. The national year-over-year home appreciation rate currently sits at 4.6 percent, lower than the both the pre-crisis and post-crisis max. Nevada has the highest rate of state hit hardest by the financial crisis at 6.5 percent. Both "bubble state" California and Florida have rates higher than the national average, while Arizona sits below that average at 3 percent.

Florida has also seen the lowest level of home price appreciation (HPA) since the bottom of the market out of all the major "bubble states." From the bottom of the housing market through the most current available HPI data, Florida has seen prices rise 30 percent, as compared to 35, 41 and 51 percent of Arizona, California, and Nevada.