What role does the Federal Housing Administration (FHA) play in real estate?

The Federal Housing Administration (FHA) plays a significant role in facilitating home ownership by providing mortgage insurance on loans made by approved lenders. This insurance protects lenders against losses that may occur if a borrower defaults on their mortgage. As a result, lenders are often more willing to make loans to borrowers who may not have large down payments or perfect credit scores because the FHA reduces the risk associated with lending. By fulfilling this role, the FHA helps increase access to affordable housing and supports stability in the housing market.

The other functions mentioned, such as inspecting properties for rental suitability, setting appraisal standards, or regulating real estate commissions, fall outside of the FHA's direct responsibilities. These tasks are typically managed by different agencies or regulatory bodies, ensuring that the FHA's primary focus remains on making home financing more accessible through its mortgage insurance programs.