The Federal Housing Administration, commonly known as FHA, has provided mortgage insurance on home loans made by FHA-approved lenders throughout the United States since 1934. FHA has insured over 35 million properties through the years, providing home-buying opportunities to families who might not otherwise have been able to purchase a place of their own. FHA is the only government agency that operates entirely from self-generated income but serves the community by stimulating economic development.
The National Housing Act of 1934 created the Federal Housing Administration in order to help the United States recover from the Great Depression. The housing industry was flat and two million construction workers had lost their jobs. It was difficult for the average citizen to find a bank that was willing to loan money for a home purchase. Mortgage terms at the time were limited to 50 percent of the property's market value, and repayment was spread over 3 to 5 years with a balloon payment due at the end. Only 4 in 10 households owned a home. FHA changed all that by being able to insure new mortgages, to promise banks that they would be paid back.
FHA continued to serve mainly as an insuring agency for loans made by private lenders. Soldiers coming home from the war in the 1940s wanted a home in which to build a family, and FHA was able to help them achieve that goal. As the decades rolled past, FHA sparked the production of millions of units of privately owned apartments for the handicapped, elderly and low-income Americans.
The Fair Housing Act of 1968 prohibited property owners from discriminating in the sale, rental or financing of a dwelling based upon race, color, religion, sex or national origin. The act was expanded in 1988 to prohibit discrimination based upon disability or familial status.
In the 1970s, when soaring energy costs threatened the survival of thousands of private apartment buildings, it was FHA emergency financing that kept them afloat. Changes in the Housing and Community Development Act raised the limits on how much money the FHA would insure on a property loan, giving home buyers greater purchase options.
The Housing and Community Development Act was amended in 1980 to negotiate the interest rates on certain FHA loans and to create a new FHA rental subsidy program from middle-income families. As the 1980s recession forced lenders to pull out of oil-producing states, it was the FHA that stabilized the housing market by continuing to insure loans when others backed out.
FHA is still a powerful presence in the U.S. economy. It continues to insure new property loans, refinance loans for homeowners who have gotten into trouble, and provide relief for homeowners who have been struck by disaster.
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