The Federal Housing Administration

• The Federal Housing Administration (FHA) is a division of the US Department of Housing and Urban Development that insures home mortgages.
  
  

FHA Loans

• While the FHA does not issue mortgage loans, it will insure loans. If a home buyer defaults on the loan, the lender can seek recourse with the Federal Housing Administration. This makes FHA mortgages less risky for the lender.
  
  

FHA Appraisal

• Before insuring a home loan, the FHA requires that the property be appraised by a FHA-approved appraiser, who will determine whether it qualifies for an FHA mortgage.
  
  

Home Inspection

• Home inspectors evaluate the condition of a home. They are concerned with a home's livability and the condition of its systems (heating, air conditioning, electrical systems, plumbing) and appliances. A home inspector will be able to describe potential problems with a home, which can save you a lot of money and trouble over time.
  
  

FHA's Recommendation

• The FHA does not require a home inspection in order to obtain an FHA mortgage. It does, however, recommend that home buyers get one. In its flier "For Your Protection: Get a Home Inspection," the FHA points out that appraisals primarily protect lenders. Home inspections, on the other hand, protect the people actually living in the home.