Americans buying and refinancing homes relied on government-insured mortgage programs even more in June, boosting the market share of such home loans to 36%, according to the Mortgage Bankers Association, which releases information weekly on mortgage applications.

That represents quite a shift from the boom, when even the Federal Housing Administration began questioning the need for insuring mortgages given the abundant credit available. In that environment, the market share for government-insured loans (both purchase and refinance) fell to a low of 5.8% in August 2005, according to MBA data.

The June share of such mortgages, in contrast, represents the highest level of such activity since November 1990. As such, it reflects both the challenged state of the economy and the mortgage market. As banks have pulled back on home lending and raised requirements for borrowers, buyers and builders have increasingly turned to FHA and other government-guaranteed loan programs as a primary source for mortgage loans.

Such programs have other advantages, too. "A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans," said Orawin Velz, associate vice president of economic forecasting at MBA. "In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance."

FHA loans received an additional boost this spring, when HUD said FHA lenders and state housing agencies could allow borrowers to use the $8,000 federal housing tax credit at the closing table via short-term loans.

Alison Rice is senior editor, online, at BUILDER magazine.