The good news is you've found that perfect home to buy, plus your excellent credit rating qualifies you for a mortgage. The bad news is the lender has restricted your loan amount to below what's needed to purchase the home because your income is too low, or maybe your debts are too high.

In this situation you will likely hear that you don't qualify because you don't meet the ratio requirements. Although this may seem like the end of the road, it's not - you still have lots of alternatives to secure the loan you're after.

WHAT ARE THE RATIOS? Most mortgage lenders will refuse a loan if there's a poor history of paying debts. Likewise, they will frequently decline loans to borrowers who appear incapable (in terms of financial capacity) of repaying loans above a certain size.

In the first case, lenders use a borrower's credit record to measure creditworthiness. In the second, a borrower's financial capacity is usually measured by using what's called "front" and "back" ratios.

The front ratio compares the total monthly housing expense (principal, interest and mortgage insurance) with the total gross monthly income. The standard front ratio calls for total housing expense to be less than 28 percent of total gross income (29 percent for FHA loans).

The back ratio compares total monthly obligations, including housing with total gross monthly income. The standard back ratio limits monthly obligations to no more than 36 percent of total gross monthly income (41 percent for FHA loans).

A lender will usually take the most restrictive one and figure a maximum monthly payment and maximum loan amount.

The important thing to know is that they are not cast in stone. Every lender has some flexibility in deciding who can qualify. So if you're initially told that your ratios will keep you from getting a loan, don't believe it.

Here are the most common ratios used by are investors:

Conventional=28/36 
FHA=29/41
VA=41/41
B/C=55/55

WHAT YOU CAN DO: You can work around the ratios with your current lender, check other loans and lenders, propose other options to the seller or do some combination of both. Here are a few ideas:

Submit a list of compensating factors. For example, try to itemize your best financial strengths, such as long-term job stability, stellar credit, job promotion or income prospects; potential overtime or other income. The object is to prove that you can meet a mortgage obligation beyond what the lender's ratios show.

Improve the ratios by paying down short term debts such as credit cards, selling assets, or getting financial help from a relative.

Increase your down payment. It will often soften the underwriter’s ratio requirements. Evaluate whether you can convert some of your assets to cash to increase the down payment. Consider offering the seller your assets in trade for a credit applied to the down payment. Or do you have a service you can barter with the seller to increase the down payment?

A different type loan may make all the difference in solving a qualifying problem due to ratios. Adjustable rate mortgages are especially good in this situation because a low start rate is used as the basis for determining the maximum qualifying loan amount. Be careful, though, that you don't end up trading an increase in your qualifying loan amount for an expensive mortgage that you will regret later.

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