FHA loans soar in Denver, Colorado

Home buyers in Colorado and Denver increasingly are turning to Federal Housing Administration-insured loans.

The Housing and Urban Development’s fiscal year, which ended Sept. 30, home buyers took out 26,151 FHA-insured loans in Colorado, 16,130 of them in the Denver metropolitan statistical area, a 47 percent and 59 percent increase, respectively, from 2008.

There were 17,782 FHA loans in 2008 in Colorado, 10,146 of them in the Denver area, shows information obtained from the Region VIII HUD office by InsideRealEstateNews.com. FHA is part of HUD.

“I would say that the FHA loan product is filling a niche in the market here in Colorado and in the Denver area,” said Deborah Griswold, the deputy director of Region VIII for HUD, which includes Colorado.

“I’m always wanting to meet the needs of our home buyers,” Griswold added. “The FHA loan program has withstood the test of time. We look at the 5 Cs of prudent lending, which include cash for the down payment, capacity of the borrower to make payments, capital, credit score and collateral. By assuring that we are following these sound guidelines we assures that we will be able to continue to serve people in our community.”

Peter Lansing, president of Denver-based Universal Lending ( a sponsor of this blog), said that the growing popularity of FHA loans does not surprise him.

“What this shows is that the FHA loan program is the most sound program for consumers to utilize in today’s mortgage lending environment,” Lansing said. “It recognizes that it is the most sound program at a time when there is a lot of uncertainty with mortgage lending. And because it requires the lowest down payment, it has become the most utilized.”

FHA loans typically require only a 3.5 percent down payment, while conventional loans typically require much more. And many first-time home buyers can use the $8,000 tax credit with an FHA loan, to further boost their buying power.

At Universal Lending, he said FHA loans account for at least 75 percent of his loans, while a few years ago, they were 10 percent to 15 percent at the most.

Still, it is not as easy to qualify for them as it had been in the past.

“I would say most Realtors and most consumers…realize that credit has tightened,” Lansing said. “Underwriting is much more conservative than what we had become used to in the last three or four years.”

And that is not a bad thing, although he said some people may feel the pendulum has swung too far.

“I think that industry is making more sound loans today that I think we have seen in probably at least seven years,” Lansing said.

The HUD data also shows that the average loan amount it has made in Colorado has risen slightly since last year.

The average mortgage for the state was $182,750 this year, almost 2 percent higher than the $179,173 in 2008. And in the Denver area, the average mortgage amount has risen by 1.15 percent to $185,020 from $182,901.

“It’s not showing a decline,” Lansing said. “It’s more of a flat or stable market. I don’t think we’re really seeing any inflation in housing prices. I really think the whole real estate market seems to be flat. Just call it stable.”

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Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

Year	Colorado	Average Mortgage Amount Colorado	Denver	Average Mortgage Amount Denver
2008	17,782	$179,173	10,146	$182,901
2009*	26,151	$182,750	16,130	$185,020
Source: HUD Single Family Data Warehouse	* HUD's fiscal year runs from Oct. 1 to Sept. 30.