Mortgage shopping then and now

We are looking for a new house. Our current house lacks a yard and a home office, and the lower house prices around here are really tempting. We're not totally positive yet that we'll be moving, but it's changed from "possibly" to "probably."

And so we're also shopping for a mortgage. I've been struck by the differences in our situation now versus when we bought our current house in 2004. And I've been struck by the differences in the responses we're getting from mortgage providers.

Then:
We had a new baby. I had a new part-time job which the mortgage company wouldn't consider because I hadn't been working there very long. My spouse was working full time and earning $37,000 per year. On that $37,000 household income our lender said we could borrow up to $300,000. We told the bank's agent that there was no way we could afford to buy a house that cost that much. She was offended. I will never forget this. She said, "We would never approve you for a house you couldn't afford." They were pushing us toward an 80-10-10 loan, where we'd put 10 percent down, have an 80 percent first mortgage and a ten percent second mortgage. We had the down payment but knew we couldn't make the payments. We decided we could buy a house costing $130,000, max. We were delighted to find one that cost only $70,000, and we were able fix it up right away because the down payment and monthly payments were low.

Now:
We have a five-year-old. I have the same part time job, and I'm also doing a lot of freelance writing now, partly as a result of finding clients through writing this blog. My spouse is working 4/5 time for his same old employer. Our annual income fluctuates a lot but is around $75,000-85,000. Taking that lower number of $75,000, a mortgage broker told us that we could borrow up to $200,000. She is urging us to go with an FHA loan, which requires a very small down payment (I think it's 3 percent). She said it's easier to get financing with an FHA loan right now. We're unwilling to put less than 20 percent down, even though we'll have to use a home equity loan on our current house to do that. We're hopeful that this house will sell easily because it's a good starter home.

We'll see what happens. It's certainly more fun looking for a house in a buyer's market, but when we are the sellers this might be a painful process.