An Overview of FHA The Federal Housing Administration (FHA) does not actually lend money.  A lot of people are shocked to hear that for the first time because "your loan is a FHA Loan" sounds like FHA lends you the money.  The FHA is part of the U.S. Department of Housing and Urban Development and in fact insures the mortgages made to homebuyers and homeowners through FHA "Approved" Lenders.  Every year the FHA Insuring Authority is approved by Congress. The National Housing Act of 1934 (pdf) The FHA was created by Congress in 1934, in response to the Great Depression and America's needs for affordable home financing.  Providing a government-backed mortgage insurance product opened the door so lenders that wanted to offer an affordable source of financing to homebuyers could do so with very little risk. In 1965 the FHA became a part of the United States Department of Housing and Urban Development (HUD).  HUD is a cabinet level agency of the federal government with the responsibility of overseeing several federal housing initiatives - the FHA program being one of them.  As a part of HUD, the FHA has grown to become the largest insurer of mortgages in the world. Much like any other loan a FHA insured mortgage is underwritten to guidelines.  The FHA guidelines are called "minimum eligibility standards".  Every loan that's submitted to FHA for "endorsement" must meet the minimum standards for credit (your credit history), collateral (the property and its marketability), and capacity (your ability to repay the loan).  It is important to note that the FHA's minimum standards are not always the standards your lender applies.  Lenders can, and often do, apply somewhat more demanding standards than the FHA requires.  This practice is referred to as "Lender Overlays". FHA Homeownership Resources FHA Disclosures & Forms FHA Mortgage Insurance FHA Mortgage Limits FHA Mortgagee Letters FHA TOTAL Scorecard Users Guide (12/2011) FHA Mortgage Credit (4155.1) FHA Lenders Guide (4155.2) FHA Approved Condominiums Housing FAQs Mortgage Credit Guide Housing Keyword Index Appraisal Reference Appraisal FAQs FHA Benefits Low Down Payment, Competitive Rates Small Minimum Investment Requirement of 3.5% Cash Investment can be "Gifted" by an Eligible Source NO Cash Reserve Required on 1- and 2-Unit Properties Flexible Qualifying and Credit Standards  Seller can Pay up to 6% Towards Buyer Closing Costs and/or Prepaid Expenses Up-Front Mortgage Insurance Premiums are Financable Non-Occupying Co-Borrowers are Allowed: "Kiddie Condo" FHA Mortgages are Assumable FHA Mortgages are Eligible for "Streamlined Refinancing" No Prepayment Penalties   FHA Single-Family Programs Regular, Section 203(b) Fixed-Rate Mortgages (FRMs) or Adjustable Rate Mortgages (ARMs) Available for 1- to 4-Unit Properties Requires Mortgage Insurance Most Widely Used Section of the Housing Act Condominiums, Section 234(c) Fixed-Rate or Adjustable Rate Mortgages Only Approved Condominiums Requires Mortgage Insurance Rehabilitation, Section 203(k) Fixed-Rate or Adjustable Rate Mortgages One Loan, One Closing Purchase or Refinance Mortgages are Eligible FHA 203(k) Renovation/Rehab Mortgage 08/19/2011 FHA Loan Limits: ML2011-29 (pdf) 12/02/2011 FHA Loan Limits: ML2011-39 (pdf)