FHA Loans Play Increasing Role

Government-guaranteed mortgages account for an increasing share of home loans in California, according to a real estate information company.

TRW REDI Property Data reports that in the first half of 1993 more than 24,000 mortgages, or 15% of new loans originated by California lenders, were FHA loans, compared to about 10% in the previous two years.

“The increase in market share of federally insured home mortgages is reflective of efforts by the government to put homeownership within the reach of a greater portion of the population,” said Nima Nattagh, TRW REDI’s market analyst. Declining home prices in most parts of the state coupled with a higher FHA loan limit, which was raised from $124,875 in 1992 to $151,725 in 1993, has facilitated these efforts.

While the growth in FHA loans has been felt across the state, significant regional disparities exist. In Riverside and San Bernardino counties and the central valley region, one out of three new loans for purchases of single-family residences are now FHA loans. However, FHA loans are not a significant part of lending activity in Los Angeles, Orange and San Diego counties or the San Francisco Bay area.