What is the Federal Housing Administration (FHA)?

The Federal Housing Administration, commonly known as FHA, is a government agency established in 1934 to provide mortgage insurance on loans made by approved lenders. Its primary goal is to make homeownership more accessible for individuals and families with lower income levels or those who may not qualify for conventional loans. FHA insures the loans, which means that if a borrower defaults, the lender is protected against financial loss. This assurance encourages lenders to offer mortgages with more lenient qualifications, lower down payment requirements, and competitive interest rates. It also plays a crucial role in stabilizing the housing market during economic downturns. FHA loans are popular among first-time homebuyers and those with limited financial resources, promoting and ensuring fair and affordable housing opportunities for Americans.