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FHA stands for Federal Housing Administration; the FHA is an arm of the Department of Housing and Urban Development (HUD). The primary focus of the FHA is to encourage homeownership in the United States. To do this, the FHA insures mortgages against borrower default.
The Federal Housing Administration (FHA) insures mortgages for borrowers with credit challenges. An agency within the Department of Housing and Urban Development (HUD), FHA enables lenders to finance home loans for those with credit mishaps such as foreclosure.