What is FHA?

FHA stands for the Federal Housing Administration. It's a U.S. government agency created in 1934 to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and to stabilize the mortgage market. The FHA primarily insures mortgages made by private lenders for single-family and multi-family properties. This insurance protects lenders against losses if a borrower defaults on their mortgage, making them more willing to lend to individuals who might not otherwise qualify for a conventional mortgage. FHA loans are commonly used by first-time homebuyers and those with lower credit scores or smaller down payments.