Guess what? Renting in your town may soon be more expensive than owning your home. Why? The economy has taken so many hits and mortgage lenders have become so conservative that according to a Zillow.com survey, only one-third of applicants qualify for top interest rates and another third of applicants can't qualify for ANY mortgage. So the pool of folks who can buy and finance new homes has shrunken. Meanwhile, the increase in foreclosures has a lot of people competing for rental housing, which forces rents higher.

Should you quit renting and buy a house?

Maybe you should. Here are five things required to shoulder home ownership.

• Decent credit. Yes, FHA loans supposedly only require credit scores of 500 if you put 10 percent down but guess what? Since that requirement went into effect, in the entire country not one FHA loan was approved with a score that low. Not one. Realistically you'll need a score of at least 620 for an FHA loan and 680 for a conventional mortgage.
• Verifiable income. Rule of thumb: Except for depreciation deductions, if you didn't pay taxes on it, you can't count it.
• At least 20 percent down. If you don't have it, you'll need mortgage insurance, which is very hard to come by unless you have 700+ credit score and a solid financial profile.
• Stable work history. Many of those who defaulted on home loans were good people who lost jobs. So it's nothing personal, but lenders want to see that you are very likely to continue working.
• Time. It may take a few years for your property to appreciate, so think twice about buying if you may have to move or sell soon.

Another opportunity that has opened up with increasing rents is the chance to make money with rental homes.

How does buying a rental differ from buying a primary residence?

• Higher down payment: at least 20 percent but possibly 25 to 35 percent.
• Even better credit: Most lenders require a score of at least 700 to 740.
• Rental income may be used to qualify.
• The appraisal costs more.
• The loan fees are higher.

When you buy a rental property, 75 percent of the rent is added to your income when your application is underwritten. The appraiser completes a schedule of rents and determines what the property should rent for (if there is a tenant already, that rent counts very heavily in the analysis). The appraiser then takes the property's condition and income and extrapolates a value for it. This is called the income approach method of valuing investment property.

When you buy a rental property, expect to pay several points in loan fees above what you'd pay for a primary residence. For example, Fannie Mae charges 3 points more for an 80-percent loan on a rental than it does for a primary home.

Buy a rental for less

Guess what? You can finance a rental home with a 96.5-percent FHA mortgage. And you won't be charged extra fees or have to have a saintly credit rating. The catch? You have to buy a 2, 3, or 4-unit property, and you must live in one of the units. But if you're renting now, you could use an FHA loan to become a landlord and a homeowner all at once