The Federal Housing Administration (FHA) is a U.S. government agency established in 1934 under the Department of Housing and Urban Development (HUD). Its primary mission is to facilitate access to affordable mortgage financing, especially for low- to moderate-income individuals and first-time homebuyers

. The FHA does not directly lend money but provides mortgage insurance to private lenders on loans they issue. This insurance protects lenders against losses if a borrower defaults, reducing their risk and enabling them to offer loans with lower down payments and more flexible credit requirements than conventional mortgages

. Key features of FHA loans include:

• Lower minimum down payment requirements, typically as low as 3.5% for borrowers with credit scores of 580 or higher

• Acceptance of lower credit scores than many conventional loans, with some loans available to borrowers with scores as low as 500, though with higher down payments

• Borrowers must pay mortgage insurance premiums (both upfront and ongoing) to cover the FHA's insurance

• FHA loans can be used to buy, build, renovate, or refinance homes, including single-family homes, multifamily properties, manufactured homes, hospitals, and residential care facilities

The FHA was created during the Great Depression to revive the housing market by making homeownership more accessible, which was difficult at the time due to high down payment requirements and short loan terms

. In summary, the FHA is a government agency that insures mortgages to encourage lenders to provide affordable home loans, particularly benefiting borrowers with lower incomes or less established credit histories