In 1934, the Federal Housing Administration (a.k.a. FHA) was established to improve U.S. home ownership standards and provide a home mortgage financing system with mortgage insurance coverage, so families that may have not been able to purchase a home could finally buy their dream home.
FHA does not make actually home loans, it just insures a home loan, so if a homebuyer defaults on their mortgage, the actual home loan lender is paid from the FHA mortgage insurance fund.
- FHA allows you to buy a house with as little as 3.5% down.
- FHA is ideal for the first-time homebuyers unable to make larger down payments.
- FHA is a solution for those who may not qualify for a conventional loan.
- Down payment assistance programs can be used for down payment and closing cost assistance.