Demand surges for VA, FHA loans

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The back-to-the-future trend in mortgages is continuing, as an industry report on government-insured home loans illustrates.

The Mortgage Bankers Assn. said today that Federal Housing Administration and Veterans Administration loans represented 35.9% of new mortgage applications in June, the highest level since November 1990.

Back in August 2005, at the peak of the easy-money era, just 6.8% of mortgage applications were for these federally insured loans. Of course, back then you could get a loan without a down payment, a decent credit score or even an income if you were willing to fudge the details on your loan papers.

The allure of VA and FHA loans these days is that, although they are paperwork-heavy, they require lower down payments than conventional loans, according to the report by the trade group.

--E. Scott Reckard