DEFINITION of 'National Housing Act'

Federal legislation passed in 1934 to create the Federal Housing Administration (FHA). Its purpose is to make credit more available to lenders for home repairs and construction and to make better housing available to low- and moderate-income families. The National Housing Act also led to the 1937 creation of Fannie Mae, a national mortgage association that provides a secondary mortgage market and further improves the availability of loan money.

BREAKING DOWN 'National Housing Act'

To this day, the FHA plays a major role in making home ownership a possibility for greater numbers of people. For example, it facilitates mortgages with down payments as low as 3.5% instead of the 20% traditionally required by conventional lenders. Its lending guidelines also allow banks to consider an applicant's whole financial picture instead of relying solely on strict guidelines and formulas.

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RELATED FAQS
  1. Does an FHA loan require a down payment?

    Learn about Federal Housing Administration (FHA) loans, which have down payments as low as 3.5%, low closing costs and lower ... Read Answer >>
  2. Do banks offer FHA loans?

    Learn how banks approved by the U.S. Federal Housing Administration offer FHA loans with lower down payment requirements ... Read Answer >>
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    Conventional mortgages require higher credit scores than FHA mortgages. Read Answer >>
  4. What is an FHA Streamline Loan?

    Refinance your high-interest-rate mortgage with an FHA streamline. The process is quick and easy and can work for most existing ... Read Answer >>
  5. Can FHA loans be used for investment property?

    Learn the unique situations in which a home buyer can take advantage of the FHA home loan program to finance an investment ... Read Answer >>
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    Learn about Federal Housing Administration loans and how financial institutions that issue FHA mortgages charge borrower ... Read Answer >>
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