What is an FHA Loan? 

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Federal Housing Administration (FHA) loan   Academic Research on FHA Loans The relationship between median and constant quality house prices: implications for settingFHA loanlimits, Hendershott, P. H., & Thibodeau, T. G. (1990). Real Estate Economics,18(3), 323-334. This paper examines the relationship between the asset price of housing and median sales price. It demonstrates that the median house prices (as reported by the National Association of Realtors) overstate the increase in constantquality house prices by about 2% per year over the 19761985 period; and that the regional differences in median house prices and their rates of increase, respectively, are systematically related to regional differences in real incomes and their rates of increase. Mortgage discrimination andFHA loanperformance, Berkovec, J. A., Canner, G. B., Gabriel, S. A., & Hannan, T. H. (1996). Cityscape, 9-24. Credit rationing, race, and the mortgage market, Gabriel, S. A., & Rosenthal, S. S. (1991). Journal of Urban Economics,29(3), 371-379. This study applies microdata from the 1983 Survey of Consumer Finances to evaluate the effects of borrower race and default risk in mortgage lending. The empirical analysis is based on a probit model of whether borrowers obtain FHA or conventional mortgages; the former are fully insured and are characterized by easier downpayment constraints, but are typically more expensive. The paper suggests that race effects in mortgage lending may persist for reasons unrelated to borrower default risk. Race, default risk and mortgage lending: A study of theFHAand conventionalloanmarkets, Canner, G. B., Gabriel, S. A., & Woolley, J. M. (1991). Southern Economic Journal, 249-262. This study explores the theory of discrimination in credit markets, and presnts a list of predictions by this theory. This study seeks to test these prediction by examining the default-risk characteristics of FHA-insured single-family residential mortgages. All things equal, empirical findings fail to support the theoretical predictions that observed default rates are relatively lower among minority borrowers or neighborhoods. Response to Critiques of” Mortgage Discrimination andFHA LoanPerformance”, Berkovec, J. A., Canner, G. B., Gabriel, S. A., & Hannan, T. H. (1996). Cityscape, 49-54. Discrimination, competition, andloanperformance inFHAmortgage lending, Berkovec, J. A., Canner, G. B., Gabriel, S. A., & Hannan, T. H. (1998).Review of Economics and Statistics,80(2), 241-250. This study tests for the presence of prejudicial or noneconomic discrimination on the part of mortgage lenders by evaluating the performance of home mortgage loans. The approach is based on the proposition that noneconomic discrimination should be more pronounced in less competitive lending environments, while statistical discrimination should not. The paper argues that this approach substantially reduces the potential for omitted-variable bias that has cast a shadow on previous studies of lending discrimination. FHA LoanLimits: What Areas Are the Most Affected?, Goodman, L., Seidman, E., & Zhu, J. (2014). This paper explores the effects of the FHA loan limits on single family insurance programs. It explores the rate of reduction and the increase of these available loans in different counties, with a total of 629 counties haviong reduced loans and 89 counties having increased loans. The paper focuses primarily on the effects of the decrease of the FHAs loan in these 629 counties. Default Risk onFHAInsured Home Mortgages as a Function of the Terms of Financing: A Quantitative Analysis, Von Furstenberg, G. M. (1969). The Journal of Finance,24(3), 459-477. FHAvs. Subprime Mortgage Originations: IsFHAthe Answer to Subprime Lending?, Karikari, J. A., Voicu, I., & Fang, I. (2011). The Journal of Real Estate Finance and Economics,43(4), 441-458. This study analyzes originations of mortgages guaranteed by the Federal Housing Administration (FHA) and of subprime mortgagesloans that dominate the non-prime mortgage market for riskier borrowers. Using home purchase and refinance loans data for 2005, the study estimates that a sizeable number of borrowers who got subprime loans would have qualified for FHA loans. The paper shows that FHA loans could be the answer to the current subprime lending crisis. FHAand VA mortgage discount points and housing prices, Zerbst, R. H., & Brueggeman, W. B. (1977). The Journal of Finance,32(5), 1766-1773. Credit rationing in the US mortgage market: Evidence from variation inFHAmarket shares, Ambrose, B. W., Pennington-Cross, A., & Yezer, A. M. (2002).Journal of Urban Economics. This paper examines the nature of mortgage credit rationing across geographic markets and time. Particular attention is paid to the response of conventional mortgage supply to higher risk conditions associated with regional recessions. The paper aims to show the use of non-price credit rationing in the mortgage market and suggests a special role for FHA-insured mortgages as a mechanism for maintaining mortgage credit supply in declining housing markets.