Lenders and mortgage insurers have declared areas suffering from the highest foreclosure rates and steepest price drops to be "distressed markets."

About 9,600 ZIP codes in 34 states have popped up on at least some bank or insurance company lists. It's not uncommon for every ZIP code in California, Florida, Michigan, Arizona, Nevada and Ohio to be considered distressed.

That usually means two things for anyone trying to buy or sell a home in these places:

• Banks and mortgage companies will demand bigger down payments. Wells Fargo & Co., for example, requires 25% in the most distressed markets, according to a document sent to mortgage brokers last month.
• You can't get mortgage insurance without putting at least 3% down and often more for investment properties, second homes and any purchase financed with adjustable-rate or interest-only mortgages.

Mortgage insurance, which protects the lender in case you default, is required anytime you finance more than 80% of a home's purchase price. So if you need it, and can't get it, that's a deal killer.

Using piggyback loans -- a primary mortgage and a home equity loan -- to finance a purchase without mortgage insurance is no longer an option for most buyers.

A growing number of home equity loans used for piggyback financing are in default and many lenders have stopped making them.

But buyers with good credit and even a little money for a down payment can still get the money they need at an interest rate they can afford -- even in a distressed market.

Just follow our step-by-step plan to find and get the best possible mortgage.

Whether you're buying a home or refinancing an existing mortgage, we have a mortgage calculator that can help you make the right decisions.