Conventional mortgage money has tightened up recently as a result of the increasing amount of foreclosures. Basically, rates are linked to credit ratings and the bar is set much higher now than in the past.  For example, someone with a 720 credit score, typically considered great buyer, has no issues with interest rates on conventional financing and 5% down-payment.  However, as you move to the mid-600 credit scores (considered reasonable in the past) expect the interest rate to jump up 1.5- 2% higher than the previous norm while the down-payment may be 20%. 

Most lenders are favoring FHA loans (government backed) for these cases where rates are not tied as tightly to credit ratings.

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