The agency stepped in amid the housing market meltdown -- which was at the core of the 2008 financial crisis -- and raised limits so it could help more homebuyers. The FHA said the program quadrupled its activity "as the private market retreated."
FHA Commissioner Carol Galante said the new changes are "an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved."
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The agency does not make home loans, but insures lenders against losses, allowing buyers who can afford as little as a 3.5% down payment to receive a mortgage.
The FHA says it currently has nearly 5 million mortgages in its portfolio.