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IF YOU'RE THINKING OF BUYING YOUR first home, now's the time. Housing starts are up. Interest rates are near 20-year lows. And to top it all off, bankers and insurance executives say they're working harder to do more business with minorities and in minority neighborhoods.

Still, statistics show that African Americans and other minorities have a hard time landing that first home. Don't despair. If you've decided it's the time to buy, here are the basics you'll need to work around the obstacles and get the house you deserve.

You'll be glad to know that housing is much more affordable today. The median price of a home is lower now than it was in 1989--and even lower than in 1979, when adjusted for inflation. As a percentage of after-tax median income, homes cost, on average, 33% less than in 1982. Interest rates are also favorable, thereby keeping your mortgage burden reasonably in check.

That combination of factors has benefited African Americans. According to the latest data from the U.S. Census Bureau, African Americans have a home ownership rate of 42%. And data compiled by the Federal Housing Authority (FHA) indicate African Americans account for about 50% of new home buyers, with the largest growth among single or newly divorced black women.

It's that kind of environment that got Rhonda and Brian Alexander of Brooklyn, New York, looking for a place of their own immediately after getting married. But like many first-time homeowners, the couple found that shopping for the perfect nest was only the beginning of their worries. "Many times we reached a point where we thought we'd hit the home stretch, only to find out a whole new process was just beginning," says Brian. Long before you get to closing, Rhonda adds, you realize that "it's hard work, work that takes dedication and persistence, but a process that is well worth it."

ASSESS YOUR DEBT

Every smart first move coward homeownership begins not with a trip to the real estate agent but with a hard look at your finances. How much can you afford to pay? Have you been paying your bills on time? Are you carrying large credit card balances? Are you struggling to make car payments? Have you seen a copy of your credit report lately? And if you're married, does your partner's credit history directly affect yours?

More than likely you'll have to apply for some sort of financing from a lending institution. Banks and mortgage lenders will scrutinize every facet of your expenses to judge just how much of a mortgage you can handle. And the statistic they'll use--the infamous debt-ratio--amounts to a monthly ratio of what you owe on outstanding bills in addition to the debt you will incur through your new home, divided by your gross monthly income.

According to home mortgage specialist Gary Clark, most lenders aim for a 28/36 debt ratio. Translated, that means not more than 28% of your gross monthly income should be devoted to housing costs, and that all your other monthly expenses should total no more than 36% of your monthly income.

Ed Dudley Jr., found out the hard way just what the debt-ratio game could do to home-buying dreams. With his sights set on a three-bedroom home in Dayton, Ohio, Dudley found his ratio wrecked due to his car loan and high credit card balances. Even after paying off his car note, Dudley discovered that banks still shied away since his expenses totaled more than 36% of his monthly income. It took several weeks and some creative math on the part of his accountant, coupled with a strong recommendation from his mortgage broker, before the bank would approve his loan. "A first-time home buyer doesn't realize that it's all about the numbers," warns Dudley.

STARTING THE HUNT

The first thing to decide is just what kind of house you want. Whether a two-family brick home or a condominium, each dwelling presents different financing options to lenders.

Next, find a real-estate agent. Asking friends and family for references is a good start, although hiring your own broker for a flat fee or hourly rate will probably result in a better deal. Most agents listed for a particular property are out to make a sale and protect the sellers of the individual property. So setting up the right relationship with a broker will go a long way in saving you time and money.

However, you can choose an agent who represents a firm you want to work with. Tell him or her what kind of home you're looking for and the kind of neighborhood you'd like to consider. That firm's broker can then consult the multiple listings service, a computer database of homes registered for sale with all agencies, for properties fitting chat description in chose areas. He or she will inform you about houses and set up appointments for you to see them. When you buy a home, your agent will get half of the commission on chat sale and the listed agency will get the other half.

Still, there remains one particularly prickly issue for African Americans: getting a bank and insurance company to actually approve the neighborhood you wish to live in. Troy White, 31, single and a Howard University graduate, found out just how thorny when he found a two-family brownstone in the Hamilton Heights section of Harlem in New York City. White's choice didn't sit well with potential lenders or insurers. Although the Fair Housing Act makes it a crime to discriminate against mortgage applicants seeking to buy homes in mostly minority areas, the first bank he approached refused him. White felt the decision hinged on his choice of Harlem. He unearthed a black loan officer at the same bank, who helped her colleagues see the value of the property despite its "undesirable location."

Even after he got the bank on board, White faced a second hurdle: trying to get insurance for his pending new home. He found it nearly impossible to get full-coverage homeowner's insurance, finding that appraisers severely undervalued the property and wanted high premiums--again because of its location. Fortunately, White knew his rights and threatened legal action.

The problem isn't isolated to New York. This past spring, one of the most reputable insurers in the country, Nationwide Insurance Co., settled charges that it discriminated against homeowners in minority neighborhoods. and promised to devote $13 million toward development in those same areas.

THE DOWN PAYMENT

The next step, dealing with the down payment, keeps many African Americans out of the homeownership game. Most lenders require a down payment of 10%-25% before considering your mortgage application. If you've got your eye on a place that costs from $50,000-$300,000, coming up with a down payment may seem a bit off-putting.

In recent years, banks and sellers have become more aggressive in finding creative solutions to overcome the down payment hurdle. One example is the National Home Owner Strategy implemented by the FHA. Under one of their programs, first-time home buyers can put down as little as 3% on a house. But be forewarned: the application can seem like an obstacle course, and getting an approval is not always guaranteed. Still, the difference is well worth the effort.

Also, the Housing and Urban Development (HUD) branch of the federal government has launched a program to specifically help neelyweds buy homes. Called the "bridal registry account," it allows couples to use any monetary wedding gifts toward the down payment on a home. You must open a savings account with one of their 37 participating banks, and the "weddillg offering" must be made directly to this account. This fund is not tax-exempt, and there is no timetable on how soon if should be used. (For more information, call 800-CALLFHA.)

PRIVATE MORTGAGE INSURANCE

If your down payment is less than 20%, your lender will get an insurance company to re-underwrite the loan. Called "private mortgage insurance" or PMI, the cost of this insurance policy will he added to the cost of the monthly mortgage you will have to pay. And you will pay until you reach 20% equity in the home and the lender can be assured of your ability and timeliness to pay each month.

These underwriters also have the final say about whether your loan gets approved. "A borrower can't do much to make their application PMI-proof. But if the credit history has not been a problem for the bank, then most likely it won't be a problem for the underwriter," explains Gordon Bussey Jr., vice president of Intercountry Mortgage in Westbury, New York. Remember: most banks work with at least four or five insurance companies. So if one rums down your application, most likely one of the others will be willing to work with you.