What does FHA not do directly with regard to housing?

The Federal Housing Administration (FHA) is primarily known for its role in the mortgage market, specifically in insuring loans and providing insurance options that help facilitate home buying for consumers. However, the FHA does not engage in the construction of homes. Instead, its focus is on helping individuals secure financing through loan insurance, which allows lenders to offer mortgages with lower down payment requirements and more favorable terms to buyers who may otherwise struggle to qualify for traditional loans.

By not being involved in building homes, the FHA concentrates on creating an environment that supports homeownership by mitigating risk for lenders and providing insurance for home loans. This distinction is important as it clarifies the separate roles played by various entities in the housing sector. Other options mentioned pertain to the functions that the FHA is indeed involved in, such as providing insurance on loans, which covers losses for lenders in case of borrower default, and offering insurance options that help protect buyers and lenders alike.