Federal Housing Administration (FHA) - a federal administrative agency, established in 1934, and now operated under the auspices of the Department of Housing and Urban Development. Congressional intent was to make home loans more readily available to borrowers with limited down payments, to exert pressure on the building industry to create more standardized good-quality housing, and to regulate the mortgage industry. Maximum FHA loan limits are relatively low and vary according to the cost of housing within a particular region. In an FHA loan, the FHA insures lenders against loss on low down payment loans provided that both the borrower and the property comply with FHA underwriting guidelines. The funding mechanism is a mortgage insurance premium  (MIP) paid by the borrower. If the borrower defaults, the mortgage insurance program will pay the bulk of the lender's loss. See also FHA loan.

© 2004 Bella Vista Publishing Company, Inc.  ISBN 0-9718225-0-6

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