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About the FHA
The Federal Housing Administration
was begun as part of the New Deal in 1934. It
guarantees private home mortgages (FHA loans)
and provides funds to promote housing construction,
especially for poorer people. It was authorized
by the National Housing Act of 1934.
FHA loan is a mortgage loan in the United States
insured by the Federal Housing Administration.
The loan may be issued by federally-qualified
lenders.
FHA loans have historically allowed lower income
Americans to borrow money for the purchase of
a home that they would not otherwise be able
to afford. The program originated during the
Great Depression of the 1930s, when the rates
of foreclosures and defaults rose sharply, and
the program was intended to provide lenders
with sufficient insurance. Some FHA programs
were subsidized by government, but the goal
was to make it self-supporting, based on insurance
premiums paid by borrowers.
Over time, private mortgage insurance (PMI)
companies came into play, and now FHA primarily
serves people who cannot afford a conventional
down payment or otherwise do not qualify for
PMI insurance.
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