The Federal Housing Administration is swiftly re-evolving as the only home loan provider available to thousands of potential homebuyers. The loan applications in process have ballooned by five hundred percent in only nine months. Much of this demand is due to Fannie Mae's new higher down payment requirements in high cost areas, along with most mortgage lenders leaving the sub-prime borrowers, has left a scarcity of loan programs available to an industry which has lived off the last few years of more and more tolerant underwriting principles.

It was only a few years ago, the country's mortgage and investment banks were requesting that the FHA be dismantled. It seemed that wall street firms and markets had unveiled a new era and formula for underwriting and securitizing real estate loans. It was a time where every person could be approved for a mortgage no matter their ability to repayment their new large debt. "You already own 4 or more investment properties ? "We got a loan for you. "No job verification? "We got a Loan for you. "No funds for down payment, no employment, you never bought a home before or you're a newbie speculative investor who is employed as a dishwasher or waitress? "We got a loan for you! Wall Street's investment banks were anxious to buy the loans because they had no purpose of securing them longer than a few weeks.

Now, the housing market has put on the breaks hard and the real estate loan industry is being penalized for its weak underwriting standards so locating mortgage loans for all but the best conservative borrowers is challenging to extremely tough to solve at the moment.

Fannie Mae and Freddie Mac have axed their loan offerings. In addition they have almost erased 100% LTV home loans and strictly limit loans with low down payment options, which was the summit of the heyday real estate market.

FHA home loan limits have been raised to $729k in high cost areas for 2008 which will help the housing slowdown. As normal, the FHA is still offering 97% LTV mortgage financing. However, not known to most is that FHA will let the 3% the borrower needs to come from an extensive range of sources. Such sources include gifts, grants, relatives and government loans. No further home mortgage program known today lets a homebuyer borrow his or her down payment, from whatever source.

This is where the new government administered down payment grant program called G.A.P. comes in. The Grant America Program is a down payment assistance program made for home buyers who buy a home using an FHA mortgage.

G.A.P. works as follows: it will "gift" the buyer up to 10% of the purchase price of a home, to a eligible borrower who buys a home enrolled in the program. A gift is money which is not repaid by the borrower and it is also not considered a loan. All one needs to do is enroll their home in the G.A.P. program, once the property meets the FHA requirements.

Mortgage Loan officers and lenders help their borrowers in to applying for a down payment grant. If the borrower qualifies for an FHA home loan and buys a home while enrolled in G.A.P., that person will be eligible for a down payment grant.

Frank Collins is an avid investor in real estate and contributor to Jumbo Mortgages and a FHA Mortgage Loan website in your local area.

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