Federal Housing Administration (FHA) Guarantee

Definition:

An insurance contract in which FHA insures that the named lender will recover a specific percentage of the loan amount from the insurer in the event that the loan goes bad.

Examples:

FHA defaults are skyrocketing, leaving many lenders no guarantee of payment.A buyer will often qualify for an FHA loan if they are able put at least 5% down towards the price of the home.

The Federal Housing Administration was set up in 1934 and insures the mortgages of millions of homeowners.