If you’re looking to take on a mortgage payment, you don’t have to do it alone. In fact, in the U.S. alone, Americans account for over $1.1 trillion in mortgage debt! While this may sound like a bad thing, it is actually an indicator of economic recovery–and a sign that Americans are asking for help during the huge undertaking of purchasing a home.
Financial assistance for mortgage payments comes in several different forms. In this article, we take a deep dive into FHA Loans, their origins, and how they work today.
Federal Housing Administration (FHA) Loans reach back in United States history nearly 100 years. In 1934, U.S. Congress began the FHA in an effort to breathe some life into the crumbling housing market. Americans were struggling to meet terms set by standard mortgages with around 2 million construction workers put out of work. At that time, only 10% of Americans owned their homes. With the help of the FHA, this number reached a whopping 68% in the 1990s!
Now that you know what prompted the creation of the Federal Housing Administration, you may be wondering what FHA Loans do for the American economy. Aside from offering prospective home owners the opportunity to engage with a mortgage, FHA Loans have a history of helping to restore the American economy after a recession. This is evidenced through several different periods of U.S. history, including:
- The post-WWII era in the 1940s: After the second World War, the FHA helped American veterans and their families find safe, affordable housing.
- The inflation in the 1970s: With high energy costs and inflation of the American dollar out of control, privately-owned apartment buildings had a hard time keeping up. During this time, the FHA helped to keep housing like this available through its emergency financing.
- The recession of the 1980s: In this economic recession, many private mortgage insurers withdrew from states tied up in oil production. Home owners relied on the FHA to stem the flow of falling housing prices while prospective buyers relied on the FHA’s financial support to get started.
- The “Great Recession” of 2008-2013: Much as it did after its inception in the 1930s, the FHA played a large role in breaking the negative spiral of the housing market by offering buyers lines of mortgage credit that were unavailable through other means.
For more information on FHA Loans, click here!
It’s clear that many people have benefited from FHA Loans over time–but where does FHA money come from?
Fortunately, income for the FHA is self-generated; this means the Federal Housing Administration gathers mortgage insurance premiums from home owners who’ve taken out a loan, by way of other lenders.
Many prospective home owners mistakenly think they can’t afford to buy the house of their dreams. The truth is that Americans have a long history of taking out mortgage loans, the act of which has a profound effect on bolstering the economy. With the history of the Federal Housing Administration’s loan program under your belt, you can now confidently participate in the FHA Loan program!
Want to know more about all things FHA? Check out our recent article on FHA Loans, or apply for an FHA Loan on our website today to get started!
