Launched in 1934 to help boost the housing market, the Federal Housing Administration
(FHA) is a government-backed loan that allows people to buy a moderately priced home with a down payment as low as 3.5 percent.
Since its inception, the FHA and HUD have insured more than 34 million mortgages and 47,205 multifamily project mortgages. The FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio. Note that the FHA has maximum mortgage limits based on the place you live. To find out how much house you can buy with an FHA loan use LendingTree's FHA loan limit tool. In the 80 years since the FHA was created, much has changed and Americans are now arguably the best housed people in the world.
The government doesn’t actually lend the money, but it does insure the mortgages. That way, if the borrower can’t repay the loan, the FHA insurance reimburses the lender. This allows mortgage lenders to offer loans to less affluent applicants who might otherwise be denied.