The FHA was formed in the 1930s to facilitate the construction, renovation, and acquisition of affordable housing. In 1965, the FHA officially became a part of the Department of Housing and Urban Development (HUD).
HUD’s main function is to fund and promote the development of affordable multi-family housing. The program has expanded to include senior housing, assisted living facilities, skilled nursing facilities, and hospitals. However, developers are restricted by limitations on the amount of commercial (non-residential) space in qualifying projects.
The FHA does not originate loans. The agency instead insures loans that are made by commercial lenders. There are hundreds of licensed HUD/FHA lenders, each with diverse appetites, expertise, and qualifications.