Which U.S. agency insures mortgages made by approved lenders through its Federal Housing Administration program?
Answer
U.S. Department of Housing and Urban Development
The U.S. Department of Housing and Urban Development insures mortgages made by approved lenders through its Federal Housing Administration program.
HUD was created in 1965 as a cabinet department responsible for national housing and urban-development policy. Its Federal Housing Administration, established in 1934, does not usually lend money directly; instead, it insures qualifying loans against borrower default. That guarantee reduces lender risk and can make home loans available with smaller down payments.
HUD also administers programs involving public housing, rental assistance, community development, and fair-housing enforcement. A common mix-up is treating the FHA and HUD as separate unrelated organizations: the FHA is an agency within HUD. Another neighboring fact is that Fannie Mae and Freddie Mac are government-sponsored enterprises, not divisions of HUD.
Mortgage insurance under FHA rules protects the lender, not the homeowner. Borrowers still remain responsible for repayment, property taxes, insurance, and other loan obligations.