FHA Insurance

Through its single-family and multifamily mortgage insurance programs, the Federal Housing Administration (FHA), which is part of within the U.S. Department of Housing and Urban Development, plays an indispensable role in financing affordable housing opportunities. FHA provides mortgage insurance for the purchase of single- and multifamily housing targeted to low and moderate-income families that insures lenders against losses in case of mortgage default, enabling private industry to construct and rehabilitate multifamily housing, single-family homes, and assisted living facilities for low and moderate-income families and individuals.

HFAs and FHA Insurance
State HFA homeownership programs use FHA single-family mortgage insurance in combination with Mortgage Revenue Bonds (MRBs) and other funding sources to finance modestly priced homes for first-time homebuyers. In 2019, just under half of HFA program loans were insured by FHA.

HFAs’ status as government entities automatically qualifies them to provide down payment assistance in connection with FHA-insured loans, a privilege not enjoyed by most private originators. Such assistance allows HFAs to assist creditworthy families who may not have the means to afford a large down payment. Over 80 percent of HFA borrowers in 2019 received down payment assistance.