FHA Mortgage Loans ‘Only Game in Town’

by Dale Kasler

In the post-boom world of real estate, FHA loans are hot again.

The Federal Housing Administration’s loan program, eclipsed during the years of soaring real estate prices and various no-money-down mortgages, is fueling new lending throughout the Sacramento region.

Mortgage brokers said Monday the FHA program, in which the federal government’s guarantees make loans more affordable, accounts for the vast majority of their business. That’s become increasingly true as credit markets tighten and conventional mortgage guidelines become more restrictive.

“This is the best game in town,” said Michael McGee of Winchester McGee Real Estate & Loans in Rancho Cordova. “It’s the only game in town, really.”

Jon Kaempfer, a loan consultant with Vitek Mortgage Group in Sacramento, said he does 60 percent to 70 percent of his loans through the FHA program, “like I did in the old days.”

With conventional lenders demanding down payments of 5% or 10%, the 3% down payment required by FHA has become a bargain. That could make the FHA “the new lender that’s going to deal with risky loans,” said Steven Krohn, an economist and analyst with the Real Estate Group Inc., a consulting firm in Sacramento.