FHA financing

FHA financing is a home loan acquired through the Federal Housing Administration (FHA). FHA dates to the National Housing Act of 1934, when it was created to stabilize the mortgage market, allow adequate home financing, and improve housing conditions and standards. FHA financing was set up mostly to allow lower income homebuyers and –owners to keep their houses.

FHA did this by regulating the interest rates and mortgage terms of the loans it insured. FHA financing, by increasing the pool of people able to place a down payment on a home, and make the monthly mortgage payments, greatly increased the market for single-family homes.

Today, FHA financing is still relevant to the housing market. FHA is currently financing 4.8 million single-family home mortgages, and is the only Federal department that is self-funded, making FHA financing a bargain for the taxpayer as well as the homebuyer.

FHA financing is especially a boon to depressed urban centers. Nearly half of the agencies loans are made in inner-city areas, and African-Americans and Hispanics are heavily represented on FHA’s roles. In addition, younger borrowers with poor credit histories have benefited form FHA financing. Because these groups frequently have difficulty acquiring credit, FHA financing has helped to open up the American financial system.