Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development's (HUD) Office of Housing in 1965. Its primary purpose is to insure mortgage loans, making home ownership more accessible for those with fewer resources for down payments.
Minimum Down Payment
The minimum down payment requirement for an FHA mortgage is 3.5 percent if the borrower has a credit score of 580 or higher. Borrowers with scores between 500 and 579 must put at least ten percent down.
Types of Loans
FHA also insures loans for home rehabilitation and improvements. The loans cover the cost of the property, plus home improvement expenses. FHA also backs manufactured housing loans and reverse mortgages for seniors called Home Equity Conversion Mortgages, or HECMs.