By James Heffernan -- Daily Staff Writer

The local credit market is far from drying up, but some lenders are tightening their purse strings.

It's back to basics if you're in the market for a home or a car, are looking to start a business, or are in need of some furniture and appliances.

First and foremost, that means making sure you have good credit when you go to finance the purchase.

Kyle Homan, a loan officer with Wells Fargo Home Mortgage in Winchester, said some of the more exotic home loans that were available a few years ago during the real estate boom, with no money down and few questions asked, are now gone.

"You can still get a loan," Homan said, "but it's kind of the way your parents had to do it" — with a down payment, documentation of income and a solid credit history.

Government-backed mortgages, such as those through the Federal Housing Administration, Veterans Administration and the USDA Rural Development program, have taken off in the last six months, he said.

FHA, which caters to first-time home buyers with its 3-percent-down, 30-year fixed-rate offerings, has made some concessions to allow for higher loan amounts and attract new customers. In Frederick County, Homan said, the agency used to cap its line of credit for a single borrower at $200,000, which, with record real estate appreciation, limited the available pool of properties. FHA has since increased its limit to $400,000 to better reflect home prices in the local market, he said.

"The single-most important thing you can do is make sure your credit is in good order before you walk in," he said.

Homan recommends checking your credit scores with the three national credit bureaus — Experian, Equifax and TransUnion — at least once a year. Some mortgage lenders base their decision solely on those scores, he said.

Car shoppers, too, are facing tighter lending standards.

"It's a little bit tougher to get credit right now," said John Marlow, of Front-Royal based Marlow Motor Co., a local Ford, Chrysler, Dodge, Jeep, Lincoln, Mercury and Nissan dealer. "If their credit is good, it's still not a problem. But marginal credit is being looked at a lot closer."

Until recently, it was not uncommon for the financial arms of automakers to offer loans for more than the purchase price of the vehicle as well as 72-month financing to keep monthly payments low.

"Those companies have tightened up somewhat," Marlow said.

This week Chrysler secured an arrangement with banking giant Citigroup to expand its credit offerings.

But September auto sales were the weakest in 15 years, and the industry is scrambling to woo would-be buyers sidelined by the consumer credit crunch. Toyota and General Motors have both announced zero-percent financing on certain models.

Houston Miller, owner of Edinburg Motors, said business remains slow despite some of the biggest incentives he's ever seen.

"They're practically giving the cars away," he said. "I've never seen anything like it."

Local banks, meanwhile, are watching the recent events on Wall Street carefully.

"We have money to lend, and we are willing and able to lend that money to people who have good credit — as we always were," said Michael Funk, president and CEO of Virginia Savings Bank.

The home lending market, in particular, is slow right now, Funk said, with a heavy inventory of unsold properties in the region and the elimination of 100 percent financing.

The bank, which has offices in Front Royal, Woodstock, Winchester and Strasburg, and recently opened a branch in Stephens City, has always been a conservative lender, he said.

"In these economic times, certainly we are here to reach out to our consumer," he said.

* Contact James Heffernan at jheffernan@nvdaily.com