Which U.S. law created the Federal Housing Administration in 1934?

The National Housing Act of 1934 created the Federal Housing Administration, or FHA, in the United States.

The law was enacted during the Great Depression, when mortgage lending was constrained and many loans had short terms, high down payments, and large final balloon payments. FHA insurance was designed to reduce lenders’ risk by protecting them against certain borrower defaults. This helped support longer-term, fully amortizing mortgages and broadened access to home finance.

The FHA does not usually lend money directly to home buyers. Instead, it insures mortgages made by approved private lenders. That distinction is a common source of confusion. FHA-insured loans are also not limited exclusively to first-time buyers.

The act had a major influence on American housing finance, although its benefits were unevenly distributed and historical FHA policies contributed to discriminatory patterns in housing markets. The agency remains part of the Department of Housing and Urban Development.