What is the main purpose of the Federal Housing Administration?

The main purpose of the Federal Housing Administration (FHA) is to insure loans made by approved lenders to borrowers with low to moderate incomes. This insurance provides lenders with a degree of protection against losses that may occur if a borrower defaults on their loan. By insuring loans, the FHA encourages lenders to offer loans to a wider range of borrowers, including those who may have lower credit scores or limited financial resources.

This insurance program enhances access to mortgage financing, which is essential for increasing homeownership opportunities across different income levels. The FHA plays a crucial role in the housing market by fostering a stable and sustainable environment for home financing, ultimately contributing to economic growth and stability in the housing sector. This focus on insuring loans is distinct from simply guaranteeing them, lending money, or selling loans, which are not the primary functions of the FHA.