What is the Federal Housing Administration?

The Federal Housing Administration, generally known as "FHA", provides mortgage insurance on Florida home loans loans made by FHA-approved lenders t. FHA insures Florida mortgages on single family and multifamily homes including manufactured homes. FHA is the largest insurer of mortgages in the world, insuring over 34 million properties since its creation in 1934.

What is FHA Mortgage Insurance?

FHA mortgage insurance provides Florida mortgage lenders with protection against losses as the result of homeowners defaulting on their home loans. Approved mortgage lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner's default. FHA home loans must meet certain requirements established by FHA to qualify for FHA mortgage insurance.

Why does FHA Mortgage Insurance exist?

Unlike conventional home loans that adhere to strict underwriting guidelines, FHA-insured home loans require very little cash  to obtain financing. As a result of the FHA lender being insured against loss there is more flexibility in calculating household income and payment ratios. The cost of the FHA mortgage insurance is passed along to the homeowner and typically is included in the monthly mortgage payment. In most cases, the FHA mortgage insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property value -whichever is longer.

How is FHA mortgage insurance funded?

FHA mortgage insurance operates entirely from its self-generated income and costs the taxpayers nothing. FHA mortgage insurance proceeds are paid from the Florida homeowners are captured in an account that is used to operate the program. FHA provides a huge economic stimulation to the country in the form of home and community development, which trickles down to local communities in the form of Florida jobs, building suppliers, tax bases, schools, and other forms of revenue.

Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development's (HUD) Office of Housing in 1965.

When the FHA was created, the housing industry was flat on its back:

• Two million construction workers had lost their jobs.
  
  
• Terms were difficult to meet for homebuyers seeking mortgages.
  
  
• Mortgage loan terms were limited to 50 percent of the property's market value, with a repayment schedule spread over three to five years and ending with a balloon payment.
  
  
• America was primarily a nation of renters. Only four in 10 households owned homes.

During the 1940s the FHA mortgage program helped finance military housing and homes for returning veterans and their families after the war.

In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA's emergency financing kept cash-strapped properties afloat.

The FHA moved in to steady falling home prices and made it possible for potential homebuyers to get the financing they needed when recession prompted private mortgage insurers to pull out of oil producing states in the 1980s.

By 2001, the nation's homeownership rate had soared to an all time high of 68.1 percent as of the third quarter that year.

The FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages since 1934. FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio.

In the more than 60 years since the FHA was created, much has changed and Americans are now arguably the best housed people in the world. HUD has helped greatly with that success.

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