The housing market may have seen the worst and finally be on the road to recovery after more than two years of decline.

Recent developments in the mortgage market indicate an improvement in credit standards, which have been stricter since 2008. Private lenders and the federal government are making larger loans available to more borrowers, boosting the huge mortgage market. A lower credit score and lower down payment, as low as 5% in some cases, now allow potential homeowners to qualify for a loan. Those actions, if they materialized, would allow more borrowers to have access to mortgages, which is necessary for the housing sector to recover.

According to Chip Cumings, president of Northwind Financial, when these movements are visible, it will be easier to predict what will be next.

Jumbo mortgages, any loan over $417,000 in the average market, made up 22% of the mortgage market before 2007, up from 6% today. According to CoreLogic, private lenders are jumping on jumbo mortgages with a 3% improvement from January to May of this year. Compared to last year, Wells Fargo nearly doubled its jumbo loans to $3.7 billion in the second quarter of this year and Chase increased 16% over the same period and will continue to grow.

Keith Gumbinger, vice president of HSH Associates, jumbo mortgages suggest greater risk for the lender, but banks are willing to take the risk on the best borrowers. If there are few foreclosures, private lenders are likely to roll out jumbo loans to a larger pool in years to come. Smaller, local lenders are also interested in the jumbo loans now, Cummings said.

For high-quality borrowers, more options are available. A Fannie- or Freddie-backed mortgage can go as high as $729,750, but private lenders can offer more when they keep the debt on their books. This is an advantage for someone looking for a house in expensive cities like New York, Boston or Washington, which in turn will help those real estate markets. Interest rates on privately backed jumbo mortgages are about 1% higher than government-backed ones.

During the mortgage crash, even those who qualified for the mortgage were unable to afford a hefty down payment that is commonly 20% or more. But over the past year, that limit has been lowered, making it easier for more people to pay with even less cash.

The days with no money down are still far out of reach. But there is a substantial decrease from the 34% down payment made the year before to 28% of the purchase price on average as of May of this year, according to CoreLogic. And the decline will continue with the availability of more loans with 10% down, according to Scott Stern, chief executive of Lenders One.

The credit score requirement is still high, but seems to be going down slightly. In May, the average borrower credit score is 757, down eight points from the previous year. But borrowers with scores between 600 and 600 may qualify for a mortgage today than they could a year ago, according to Stern.

As small as these changes are, they still indicate that mortgage lenders are now ready to take more risk and test the limits. And as lending mode kicks in, more applicants could qualify, an indication that the housing market is on the right track.