Federal Housing Administration Law and Legal Definition

The Federal Housing Administration (FHA) is a wholly owned government corporation established under the National Housing Act of 1934 to improve housing standards and conditions; to provide an adequate home financing system through insurance of mortgages; and to stabilize the mortgage market. It provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals.

FHA is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely. 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 jobs, building suppliers, tax bases, schools, and other forms of revenue.

FHA became a part of the Department of Housing and Urban Development's (HUD) Office of Housing in 1965.