I don't know that government backed loans are the rule. There are a lot of marginal loans being made to people with crappy credit, low or no down payments, alternative jobs (artists), and other "creative financing" which you won't get with the government backed loans. Of course, when the credit/bubble bursts the government is going to step up and back these loans to a degree anyways just like the S & L crisis that ole Neil Bush was a part of.

err, I meant that as credit/real estate bubble

I am not sure what you mean by "government-backed mortgages". I can tell you that Fannie Mae and Freddie Mac have nothing to do with anything called "government-backed mortgages".

Fannie and Freddie buy mortgages from people or companies who hold mortgages and then they bundle them up in packages to reduce risk and then issue dept instruments i.e. bonds to the investment community. This allows for a strong secondary market in mortgages and helps guarantee liquidity among mortgage venders. Only mortgages under the "Conforming Loan Limits" amount, $417,000 this year, qualify. Any mortgage over that amount is called a "jumbo" and costs you more. The U.S. government does not guarantee anything done by Freddie or Fannie. Freddie and Fannie do get preferential terms on which they do business in return for closer government oversight.

This probably doesn't help you in the slightest, but in Australia we have an almost completely deregulated banking system and nothing the banks or any other financial institution do is government-guaranteed or backed. You borrows your money and you takes your chances.

IANAMB (I am not a mortgage broker), but I think "government-backed mortgages" refers to mortgages obtained through the VA or FHA.

A government-backed mortgage is one where the loan is provided by a federally regulated institution.

Still leaving the question, when is a home loan NOT provided by a federally regulated institution?

Here is some info about HUD/FHA loans. I did not find any information on what perchentages of mortgages are FHA but considering their limits and average home prices I would guess that the total is well less than half.

I'm not sure how a federally regulated institution granting a mortgage makes it government-backed. The U.S. does not back mortgages other than indirectly via FHA loans.

A conforming mortgage means that it's a loan that conforms to the criteria Fannie Mae or Freddie Mac use when purchasing wholesale loans on the secondary market. If you have a conforming mortgage, it doesn't mean that it will be sold to one of those agencies, but the lender will have the comfort that it could be sold fairly easily. As a borrower, a conforming loan is probably the cheapest loan available if you meet the high credit requirements. Mortgage-backed securities backed by conforming loans are generally very conservative investments (with some caveats that are too complex to go into here).

Like arse_hat said, the FHA loans are the only gov't mortgages I can think of that are "backed" by the government as one would normally use the term "backed."

Plenty of regulated banks make loans that are not conforming or gov't-backed. But the regulators don't have much to do with the loans. The FDIC guarantees your savings up to $100k, and bank regulators generally regulate the type of assets a bank can hold. That is, they make sure the bank doesn't put out a ton of risky loans that put the bank at risk of failure. But the cure for holding to many risky loans is just to sell off the shitty assets and buy better ones--the regulators don't have much to do with the mortgage underwriting process.

And you can get mortgages from unregulated financial companies as well. The example I can think of is Thornburg Mortgage, which is organized as a mortgage REIT and specializes in jumbo residential mortgages. Forming a mortgage REIT (real estate investment trust) is a common alternative to forming a bank. Some companies like GMAC (General Motor's financial arm) and Countrywide are non-bank mortgage underwriters (and not REITs either), but both have since become chartered banks though their bank charter is different than, say, Bank of America's.

Sorry, that last sentence was confusing. GMAC and Countrywide did not start as banks, and they are generally thought of as "non-bank" mortgage lenders. However, both now have chartered bank subsidiaries through which they raise money by selling CDs, but this represents only part of their financing sources. H&R Block's Option One mortgage lending arm is another example.

Meh. I just cut that line. Wasn't all that important anyway.

Oh, and for the record, here's the context (pdf).