Federal Housing Administration Definition

The FHA is a federal agency that insures residential mortgages. The FHA was created in 1934 and is, today, part of the Department of Housing and Urban Development. The FHA offers mortgage programs to assist buyers unable to qualify for a mortgage loan from conventional lenders such as banks. FHA loans are limited in amount but usually carry a lower interest rate than comparable market mortgages. Funds for FHA loans are derived from private investments.