The Federal Housing Administration (FHA) is a wholly owned government corporation that was established under the National Housing Act of 1934. The goal is to improve housing standards and conditions, to provide an adequate home financing system through insurance of mortgages and to stabilize the mortgage market.
The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes. FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans.
FHA loans require special an appraisal/inspection that determine if a property meet the agency's minimum property standards. While somewhat more expensive that a conventional loan in terms of interest rates and insurance fees. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner's default. Loans must meet certain requirements established by FHA to qualify for insurance. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.
The FHA was consolidated into the newly established Department of Housing and Urban Development (HUD) in 1965.
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