A surge in market share for the FHA loan has experts pegging the tried-and-true mortgage option as a possible major factor in a real estate market recovery. According to a recent NPR news report, the Federal Housing Administration is insuring nearly a third of U.S. home loans.

FHA loans were fairly unpopular during the boom years, which saw subprime loans take over the mortgage market. Now, with the collapse of the subprime bubble and re-imposing of strict lending guidelines, the FHA loan is often the most affordable for those who have less-than-stellar credit or need a lower down payment option.

According to Colorado Springs mortgage officer Marsha Kromer, of First Mortgage Company, FHA loans are easier to qualify for than a typical conventional loan, “but it still has to make sense.” A homebuyer has to qualify according to FHA guidelines, which include ratios, credit scores and a history clear of bankruptcy for two years and foreclosure for three. The current down payment requirement for an FHA loan is 3%, which increases to 3.5% on January 1, 2009, still much less than the typical 5% or even 10% on a conventional loan. In Colorado Springs, the maximum loan amount for an FHA loan is $271,050.

For more detailed information on FHA loan program from the government’s website, click here. For further discussion of FHA loans and their growing importance in today’s market, click here for an NPR print article with audio links.