What type of insurance does FHA provide for the loans it insures?

The Federal Housing Administration (FHA) provides mortgage insurance for loans that it insures, which is essential for protecting lenders against losses that may occur if a borrower defaults on their loan. This type of insurance encourages lenders to offer loans to borrowers who may otherwise not qualify due to lower credit scores or limited down payment options.

The mortgage insurance provided by the FHA is known as FHA mortgage insurance premiums (MIP), which borrowers pay as part of their monthly mortgage payments or as an upfront fee. This insurance enhances the borrowing opportunities for first-time homebuyers and those with less than perfect credit, making homeownership more accessible.

In contrast, homeowners insurance is designed to protect against losses resulting from damage to the home itself, title insurance protects against issues related to the ownership of the property, and flood insurance covers specific risks related to flooding. While these types of insurance are vital in their own right, they are not provided by the FHA. Instead, the FHA's focus is specifically on mortgage insurance, which is crucial for securing FHA loans.