FHA Today reports that "The Federal Housing Administration (FHA), a wholly owned government corporation, was established under the National Housing Act of 1934 to improve housing standards and conditions. Its goal was to provide an adequate home financing system through insurance of mortgages, and to stabilize the mortgage market."

The FHA program basically has five types of home loans:

1. BASIC FHA requires 3% down payment and allows refinances up to 97% loan to value.
   
2. Disaster Victim Program requires no down-payment and allows 100% financing of the home.
   
3. Rehab-Loan Program allows borrowing above the purchase price to make home improvements.
   
4. Streamline Mortgage Refinancing for current FHA customers who want a fast rate and term loan with reduced closing costs. (97.5% maximum loan to value)
   
5. Cash out FHA Home Mortgage for refinancing and bill consolidation (95% maximum loan to value)

According to mortgage banker, Nationwide, "FHA home loans have become the new standard for sub-prime mortgage lending." Mortgage brokers, bankers and lenders have taken another look at these FHA government loans as the guidelines have changed for the better.

Over the last seventy years, FHA mortgage loans have evolved significantly with new loan products for refinancing and new home buying, but the "pro-consumer" approach has remained constant. Reduced closing costs and no penalties for early pay-off continue to be key details for FHA loans that benefit borrowers more than mortgage lenders.

Benefits of FHA Mortgages for Purchase or Refinance
It’s no secret that consumers would like to secure the best deal when shopping for a home loan online. Most people have heard of the FHA mortgage, but very few consumers realize how much FHA has expanded their loan eligibility.

FHA stands for Federal Housing Administration, and with built-in mortgage insurance, an FHA loan continues to help homeowners save hundreds of dollars each year.