FHA is an acronym for The Federal Housing Administration. The Federal Housing Administration or FHA provides mortgage insurance or guarantees on mortgage loans that meet the requirements established by FHA and are originated by an approved FHA mortgage lender.

FHA insures mortgages on owner occupied single family and multifamily homes. FHA does not make the home loans. FHA insures mortgage loans made by private mortgage lenders including banks. There are FHA approved mortgage lenders throughout the United States in all 50 states including some of the nation’s largest banks and small independent mortgage companies.

Each approved FHA mortgage lender sets its own mortgage rates and terms, FHA does not establish loan rates and costs. There are some limitations on the costs that are established by FHA, but comparison shopping for FHA loans is as important as it is with any mortgage loan.

Along with underwriting or loan approval guidelines established by FHA, FHA loans have a mortgage insurance cost that is paid by the home loan borrower. The FHA mortgage insurance is paid by the home loan borrower in the form of a Mortgage Insurance Premium that is added to either the monthly mortgage payment and/or as a lump sum payment at the time of the loan closing.

The mortgage insurance on FHA loans provides the mortgage lenders with protection against losses that may result from the homeowners defaulting on the mortgage loans. All FHA loans must meet certain requirements established by FHA to qualify for insurance and be insured by the government agency.

The Federal Housing Administration was created by Congress in 1934. In 1965, the Department of Housing and Urban Development (HUD) was formed as a Cabinet level government agency. The FHA became part of the Department of Housing and Urban Development’s Office of Housing. Per the U.S. Department of Housing and Urban Development web site, the mission of HUD is to:

HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.

To find current FHA mortgage rates see FHA Mortgages.

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