Close this search box.

Table of Contents

National Housing Act


The National Housing Act is a United States federal legislation, first enacted in 1934, that aimed to boost the housing market, improve housing standards, and increase homeownership by providing federal insurance to private mortgage loans. The Act established the Federal Housing Administration (FHA), which insures approved lenders against default losses on mortgages and sets standards for construction and underwriting. Over the years, the Act has been amended multiple times to further support housing programs and initiatives in the United States.


The phonetics of the keyword “National Housing Act” in the International Phonetic Alphabet (IPA) is:/ˈnæʃənəl ˈhaʊzɪŋ ækt/

Key Takeaways

  1. The National Housing Act was introduced in 1934 as part of President Franklin D. Roosevelt’s New Deal in an effort to stabilize the housing market during the Great Depression.
  2. The Act aimed to improve housing standards and conditions, provide a system of mortgage insurance, and increase the availability of affordable housing by creating the Federal Housing Administration (FHA) and Federal Savings and Loan Insurance Corporation (FSLIC).
  3. As a result of the National Housing Act, the US experienced a significant growth in the housing sector due to the increased accessibility of mortgages and a shift in the focus of housing policies toward promoting homeownership and stabilizing the national housing market.


The National Housing Act is a significant business/finance term because it represents a landmark piece of legislation introduced in 1934, which aimed at addressing the housing crisis during the Great Depression in the United States. This Act laid the foundation of the Federal Housing Administration (FHA) and established a robust mortgage insurance program designed to make housing more accessible, affordable, and attainable for millions of Americans. Furthermore, it played a pivotal role in stimulating the housing market, promoting homeownership, and fostering economic recovery by providing financial stability, protecting homeowners against foreclosure, and standardizing lending practices. This groundbreaking legislation continues to have a lasting impact on the housing industry and financial services sector, shaping modern-day mortgage policies and financing practices.


The National Housing Act was enacted with the primary purpose of stimulating the housing industry, providing affordable housing solutions, and stabilizing the mortgage market in the United States. This act, which was first introduced in 1934, was a crucial response to the devastating effects of the Great Depression on the housing market. By establishing the Federal Housing Administration (FHA) and later, in 1938, creating the Federal National Mortgage Association (Fannie Mae), the National Housing Act aimed to make mortgages more accessible, affordable, and safer for the American public. These organizations provided the necessary support to the housing sector by insuring private lenders against losses and increasing the availability of long-term, low-cost mortgages. With affordable housing and stability in the mortgage market as its core objectives, the National Housing Act has played a pivotal role in shaping the evolution of the U.S. housing market and encouraging homeownership. The FHA’s mortgage insurance program has made it possible for millions of Americans who might not have qualified for traditional mortgages to become homeowners, thus contributing to the growth and vitality of communities across the nation. Over the years, the act has been amended multiple times to meet the changing needs of the real estate landscape, addressing issues such as urban renewal, fair housing, and energy-efficient homes. In summary, the National Housing Act remains an important cornerstone of the U.S. housing policy, ensuring the continuous growth of homeownership opportunities for a wide range of income levels and fostering economic resilience in the country.


The National Housing Act is a United States federal law that was first introduced in 1934 to address housing issues during the Great Depression. Over the years, various amendments and additional provisions have been made to the Act to help improve housing conditions in the country. Here are three real-world examples related to the National Housing Act: 1. Establishment of the Federal Housing Administration (FHA) – The National Housing Act of 1934 created the Federal Housing Administration (FHA). The FHA’s primary goal was to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and stabilize the mortgage market. By providing mortgage insurance to lenders, the FHA helped reduce the risk involved in lending money for housing, which in turn encouraged more lenders to issue mortgage loans, facilitating an increase in homeownership. 2. Creation of Fannie Mae – The National Housing Act was amended in 1938 to establish the Federal National Mortgage Association (FNMA), later known as Fannie Mae. Fannie Mae’s primary purpose was to create a secondary market for home mortgages that were insured by the FHA. Fannie Mae bought secured FHA loans from banks and other lenders, providing them with more capital to finance additional home loans, thereby promoting the growth of affordable housing. 3. Implementation of the Section 8 Housing Program – In 1965, the National Housing Act was again amended to create the Section 8 Housing program, which provides rental assistance to low-income families, the elderly, and the disabled. This program offers subsidies for housing so that these individuals can afford clean, safe, and decent homes in the private market. By extending financial assistance to those in need, the Section 8 program has played a crucial role in promoting affordable housing options throughout the United States.

Frequently Asked Questions(FAQ)

What is the National Housing Act?
The National Housing Act is a federal law that was passed in 1934 to establish the Federal Housing Administration (FHA) and improve housing standards, conditions, and affordability in the United States. The Act aimed to stimulate the housing market by making loans accessible and affordable for middle and lower-income Americans.
What was the purpose of the National Housing Act?
The purpose of the National Housing Act was to address the housing crisis during the Great Depression and provide widespread access to affordable and adequate housing. The Act also aimed to create jobs in the construction industry, foster community development, and stabilize the mortgage market through the creation of the Federal Housing Administration (FHA).
How did the National Housing Act impact the U.S. housing market?
The National Housing Act had a significant impact on the U.S. housing market by introducing long-term, fixed-rate mortgages with lower interest rates. This made home loans more affordable and available for a larger group of people. The FHA mortgage insurance programs also established standards for construction and underwriting, which led to improved housing conditions across the nation.
What are the key components of the National Housing Act?
The National Housing Act incorporated several key features, including creating the Federal Housing Administration (FHA), establishing mortgage insurance programs, implementing regulations on the construction and financing of homes, and introducing loan terms and down payment requirements that increased accessibility to homeownership.
Does the National Housing Act still affect the housing market today?
Yes, the National Housing Act continues to influence the housing market today through the Federal Housing Administration (FHA) and its mortgage insurance programs. FHA-insured loans are still a popular option for borrowers who may not qualify for conventional loans, have a lower down payment, or are looking for more lenient credit requirements.
How does the FHA support homeownership through the National Housing Act?
The FHA supports homeownership by insuring approved mortgage lenders against the risk of borrower default. This encourages lenders to offer more affordable loan options to a wider range of borrowers, including those who might not qualify for conventional loans due to credit, income, or down payment constraints. The FHA also sets standards for construction and underwriting, promoting better housing conditions and sustainable homeownership.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More