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.

RELATED TERMS
  1. Federal Housing Administration ...

    A United States government agency that provides mortgage insurance ...
  2. FHA Loan

    A mortgage issued by federally qualified lenders and insured ...
  3. Uninsurable Property

    A home that is not eligible for insurance through the United ...
  4. Up-Front Mortgage Insurance - UFMI

    An insurance premium that is collected, typically on Federal ...
  5. FHA Streamline Refinance

    A mortgage-refinancing option offered by the Federal Housing ...
  6. FHA 203(k) Loan

    A type of federally insured mortgage product for individuals ...
Related Articles
  1. Investing

    7 Things To Know About FHA Home Loans

    Federally qualified lenders issue FHA loans, and the Federal Housing Administration insures them.
  2. Investing

    Before You Choose An FHA Mortgage: 7 Key Points

    FHA mortgages offer flexibility and low down payments, though they're often pricier than traditional loans backed by private mortgage insurance.
  3. Retirement

    Understanding FHA Home Loans

    Don't be overwhelmed when filling out these forms. Find out what you need to do here.
  4. Personal Finance

    Why Choose an FHA Jumbo Mortgage Over Other Jumbos?

    Housing prices are through the roof in the locale where you’d like to live. How will you afford to buy? One of these home loans may be the answer.
  5. Investing

    FHA Money Trouble Causes Concern For Homebuyers

    The FHA says it's operating in the black, but reports say otherwise. If it goes bankrupt, what will the repercussions be?
  6. Personal Finance

    Is An FHA Mortgage Still A Bargain?

    If you're putting down less than 20%, the FHA's mortgage insurance premium could cost you more than private mortgage insurance with a commercial lender.
  7. Personal Finance

    Purchasing a Home with Bad Credit Is Possible: Here's How

    A bad credit report can become an obstacle, resulting in denials for credit or higher interest rates, but borrowers with low credit scores can still purchase a home.
  8. Personal Finance

    Mortgage for a Manufactured Home? Try the FHA

    FHA loans are often a good alternative for those who have trouble obtaining a conventional mortgage, although you do have to pay an insurance premium.
  9. Personal Finance

    Insuring Federal Housing Authority Mortgages

    This insurance has an edge over private mortgage insurance. Find out why.
  10. Investing

    Is An FHA Mortgage Still A Bargain?

    Borrowers initially flocked to FHA loans due to their low down payments and accessibility for people with low credit scores.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. Are FHA loans fixed?

    Learn more about Federal Housing Authority (FHA) loan programs, the requirements for qualifying and how such loans can be ... Read Answer >>
  4. What's the difference between FHA and conventional loans?

    Conventional mortgages require higher credit scores than FHA mortgages. Read Answer >>
  5. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Understand the difference between a conventional mortgage that requires primary mortgage insurance and a Federal Housing ... Read Answer >>
  6. What are the requirements for an FHA loan?

    Qualify for homeownership with an FHA-backed mortgage. Borrowers with imperfect credit benefit from this government-sponsored ... Read Answer >>
Hot Definitions
  1. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  2. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  3. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  4. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
  5. Border Adjustment Tax

    A tax levied on goods based on where they are sold – exported goods are exempt from tax; those imported and sold in the ...
  6. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
Trading Center