The Federal Housing Administration (FHA) is a government agency that provides insurance for loans granted by FHA-approved lenders throughout the US. The FHA insures banks that provide loans to borrowers with low down payments, usually 3.5%–5%, and competitive interest rates. The FHA sets the guidelines for the various types of loans it makes available to borrowers. As part of their monthly loan payments, borrowers must pay a mortgage insurance premium that goes to the FHA. If a borrower defaults on a loan and the lender has to foreclose on the home, the FHA will provide loan funding to the lender through these public mortgage insurance premiums paid by borrowers.

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