what is the federal housing administration fha 
the term federal housing administration fha refers to a u s agency that provides mortgage insurance to fha approved lenders the fha was established in 1934 by the u s government and became part of the u s department of housing and urban development hud in 1965 1the fha funds its operations with income generated through mortgage insurance premiums mips fha loans allow lower down payment minimums and lower credit scores than traditional lenders this opens up homeownership to thousands of americans who otherwise couldn t qualify for a mortgage the mortgage insurance protects lenders against losses from mortgage defaults so if a borrower does default then the fha pays the lender understanding the fhathe fha is one of the world s largest mortgage insurers protecting fha approved lenders from losses especially if the borrower defaults it was established in 1934 to help stimulate the u s housing market 2 the underlying idea was that more people would qualify for mortgages to buy homes if lenders were provided with insurance as noted above the agency came under the purview of hud s office of housing in 1965 1the fha insures mortgage loans in the united states and u s territories for the following property types most fha loans require a lower minimum down payment as little as 3 5 which means that loans are insured for up to 96 5 34 approved fha lenders can also provide loans to people with lower credit scores than most conventional loan lenders these benefits make fha loans popular with first time homebuyers qualifying borrowers must also purchase mortgage insurance these premiums are made to the fha which it uses as self generated income 5