History of the FHA

by Jane L.Feb. 25, 20173
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The History of FHA

The Federal Housing Administration, also known as FHA, is part of the Department of Housing and Urban Development. Since it was established in 1934, it has offered millions of low-interest loans to people who might not otherwise be able to buy their own home. If you have dreamed of home ownership but do not qualify for a conventional loan, you should ask a qualified loan specialist about applying for an FHA loan.

FHA Inception

In 1934, the country was mired in the Great Depression and the housing market was in dire straits. In response to both of these issues, Congress established the FHA, an organization that insures mortgages. At that time, two million construction workers were unemployed and most Americans could not meet the requirements to get a mortgage. In fact, 60 percent of households rented their homes or apartments. Getting Americans into their own homes was a key component of the strategy to help the country recover from that economic devastation.


Since its inception, the Federal Housing Administration has insured over 34 million single-family and multifamily loans. As the financial landscape has changed over the years, FHA loans have been there to help Americans adapt to new conditions. For instance, many veterans benefited from FHA loans when they returned from WWII.


FHA loans are still a great option for people who have limited incomes or difficult credit histories. Because FHA insures the loans, you can put down a down payment that may be only 3.5 percent of the payment price as opposed to the 10 percent or 20 percent that a conventional loan may require. The closing costs are also lower than with conventional loans. If you have less than perfect credit, you will find it difficult to acquire a conventional loan but may well qualify for an FHA loan.

If you already own a home but are having difficulty making your payments due to financial issues, an FHA-qualified lender may be able to help you refinance your mortgage.

Before you apply for any mortgage, you need to find a reputable mortgage specialist to advise you, one that is an expert in FHA loans as well as conventional loans. The FHA program is totally self-sufficient, so it helps you without being a drain on the economy. In fact, high rates of home ownership help keep the American economy strong.

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