The FHA is the Federal Housing Administration, which is a federal agency in the United States Department of Housing and Urban Development (HUD); if your loan is an FHA-secured loan, it means it is underwritten by them. The lending organization provides all the funds being borrowed - the FHA simply backs the transaction through mortgage insurance in case the borrower does not pay off his or her loan. The FHA and their loan programs are created to help low-to-moderate income buyers by easing credit requirements. Different from the VA appraiser panel, the lending agency working with FHA has the ability to pick the appraiser.

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Typically, a buyer has to pay less of a down payment on an FHA-insured loan, while the rates remain standard market rates. FHA loan programs are particularly beneficial to those homebuyers with less accumulated starting capital.