FHA Home Loans - Government Mortgages

Federal Housing Administration Program

FHA home loans
The FHA home loan program is run by the Federal Housing Administration, a governmental body which aims to assist low-income families in the United States to buy a home.

How does the FHA home loan program work?

Essentially, the FHA makes low-income families a more attractive proposition to lenders by guaranteeing repayments on a home loan. Should the homeowners fail to keep up repayments, the FHA is accountable. The individual or family buying the property is only required to ay a small cash sum up front, and the cost of the mortgage insurance is simply added to the monthly repayments. After a few years these should start to reduce, as the money owed on the home gets smaller and the equity within the property grows.

You can find out more about the FHA home loan scheme and other types of state-backed mortgages by visiting out government home loans page.

Can FHA home loans be taken out with any company?

No, the mortgage company must be pre-approved by the scheme. The mortgage product must also conform to specific FHA regulations and conditions.

More information on the FHA

The Federal Housing Administration was established by the government in 1934 and is currently the world’s biggest home loan insurer. It was of enormous importance in the mid-1940s when many homes were needed for returning war veterans and their families. For more information on VA home loans, click here.

To date the program has underwritten over thirty million homes across America and is without doubt one of the contributing factors towards the country’s significant home ownership spurt. Where buying a home was once a pursuit reserved for the financially wealthy with over 60% of the population in rented accommodation, Americans are now much more likely to buy their homes with an estimated one in three opting to rent.

The FHA is a completely self-sufficient government agency; it generates and operates on its own revenue, therefore does not cost Americans a cent in taxes. In fact, it seems that the FHA’s existence only creates more wealth for the economy through the construction revenue created through increased homeownership, as well as the boost to communities that these extra homes and families bring, for example, job creation, school attendance, etc. In 1965, the program was adopted by the HUD (Dept. of Housing and Urban Development).




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