Paper with words fha loan on a wooden background.
The FHA, or Federal Housing Administration, is a government agency that insures mortgage loans across the United States. This insurance protects mortgage lenders in the event the property owner falls behind on their loan.
Thanks to the FHA’s financial protection, FHA-approved lenders are able to offer mortgage loans to borrowers with lower credit scores and lower down payments than other loan programs allow.
What is the FHA?
The Federal Housing Administration is an agency that guarantees FHA mortgage loans — U.S. mortgage loans originated by FHA-approved lenders. The group falls under the purview of the U.S. Department of Housing and Urban Development and is funded via the mortgage insurance premiums it collects from borrowers. The FHA’s current leader is commissioner Brian Montgomery.
History of the FHA
The FHA was created by President Franklin Roosevelt in 1934 (during the Great Depression) by way of the National Housing Act. The agency has played many roles over the years, first helping to finance military and veteran housing during World War II, then helping to spearhead construction efforts for low-income housing in the ’50s, ’60s, and ’70s.
Since its launch, the FHA has insured millions of American mortgages. As of October 2019, the agency insures over 8 million single-family mortgages, 12,000 multifamily mortgages, and thousands of mortgages for residential care facilities and hospitals.
What are FHA Loans?
FHA loans are mortgage loans that are originated by FHA-approved lenders and insured by the Federal Housing Administration itself. An FHA mortgage loan must adhere to the agency’s strict lending guidelines, which dictate the safety of the property being purchased, the financial capabilities of the borrower, the balance of the loan in relation to local incomes, and more.
FHA loans are designed for low- and moderate-income earners, as they allow for lower down payments and lower credit scores than conventional loan options. They can be used for single-family homes, multifamily properties (up to four units), manufactured and mobile homes, and condos. The FHA also insures mortgage loans for hospitals and care facilities.
According to the mortgage technology provider Ellie Mae, 16% of all mortgage loans in September 2019 were FHA loans. The majority of those (72%) were purchase loans, while just over a quarter (28%) were refinances.

[Read More]