what the fha does is guarantee the loan that makes it easier to get bank approval since the bank isn t bearing the default risk some people refer to it as an fha insured loan for that reason 
borrowers who qualify for an fha loan are required to purchase mortgage insurance with the premium payments going to the fha 4history of the fha loancongress created the fha in 1934 during the great depression at that time the housing industry was in trouble default and foreclosure rates had skyrocketed 50 down payments were commonly required and the mortgage terms were impossible for ordinary wage earners to meet as a result the u s was primarily a nation of renters and only one in 10 households owned their homes 5after the government created the fha to reduce the risk to lenders and make it easier for borrowers to qualify for home loans the homeownership rate in the u s steadily climbed reaching an all time high of 69 2 in 2004 according to research from the federal reserve bank of st louis in mid 2024 the rate stood at 65 6 6though principally designed for lower income borrowers fha loans are available to everyone including those who can afford conventional mortgages in general borrowers with good credit and strong financials will be better off with a conventional mortgage while those with poorer credit and more debt as well as would be homebuyers who simply don t have the cash for a larger down payment can benefit from an fha loan types of fha loansin addition to traditional mortgages the fha offers several other home loan types this is a reverse mortgage program that helps homeowners age 62 and older convert the equity in their homes to cash while retaining the home s title the homeowner can take the funds as a lump sum in a fixed monthly amount in a line of credit or in some combination 7this loan factors the cost of certain repairs and renovations into the amount borrowed it s helpful for those willing to buy a fixer upper and put some sweat equity into their home this program is similar to the fha 203 k improvement loan program but it s focused on upgrades that can lower your utility bills such as new insulation or solar or wind energy systems this program works for borrowers who expect their incomes to increase the graduated payment mortgage gpm starts with lower monthly payments that increase over time the growing equity mortgage gem has scheduled increases in monthly principal payments both promise shorter loan terms 