Imagine it is 1934.

The United States is in the depth of the Depression. Out of every ten households, only four own their own homes.

The normal mortgage is limited to 50% of the home's value. If you want to buy a home, that means you must come up with a 50% down payment.

The 30 year fixed rate mortgage, considered the staple of mortgage financing today, doesn't exist. Most home mortgages have a payment term of three to five years and end with a large balloon payment.

Buyers wanting to buy a home find it nearly impossible to locate a bank that will finance them.

Millions of people are unemployed. More than 2,000,000 construction workers alone are jobless.

In such an environment, FHA and FHA home loans are born.

In 1934, the federal government created the most successful government program in history, the Federal Housing Administration, also known as FHA. The purpose - to revive the dream of homeownership.

FHA has continued to the housing rescue many times throughout its history just as it did during the Depression.

After World War II, housing was in short demand. Veterans returning from the war wanted to settle down but there was a shortage of housing and mortgage financing.

Again FHA came to the rescue. FHA home loans made it possible for returning Veterans to get mortgage financing for their families after the war.

During decades that followed, FHA ignited apartment development for lower income, the elderly, and the physically challenged. Millions of apartment properties were built to help provide homes for people with difficult circumstances. FHA had come to the rescue again.

In the 1970's, the American economy ran rampant with out of control inflation. Energy costs threatened to undo our economy.

FHA appeared on the scene providing emergency financing for apartment owners strapped for cash. FHA helped keep them above water lessening the chance of greater financial disaster.

In the 1980's, private mortgage insurers were pulling out of any states in America whose economies were prominently connected to oil production. Recession was reeking havoc but FHA moved to steady decreasing home prices by insuring FHA mortgage lenders against loss.

The success of FHA home loans has made the United States the best housed country in the world. In 2001, the homeownership rate soared to more than 68%.

But here is the most amazing part of all. FHA is not taxpayer funded. It is not subsidized by the Federal Government. It is totally and completely funded by insurance premiums collected directly from FHA borrowers.

Today, FHA is coming to the rescue again. We are all well aware that the housing market is in the dumps. Selling a home is difficult. Refinancing is also difficult. Lenders have disappeared and money is tight.

Recently the President signed into law the Hope For Homeowners program. This program was created specifically for borrowers facing difficulty making mortgage payments. The program goes into effect October 2008 and borrowers will be able to refinance with FHA-insured mortgages that are affordable.

In addition, FHA has dramatically increased loan amount limits to help steady the housing and mortgage market.

In future articles regarding FHA home loans, I will explain some of the key benefits to FHA mortgage financing as well as essential elements to qualifying for FHA home loans.

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