FHA – Federal Housing Administration – Loans FHA - Federal Housing Administration - Loans are government loans insured and backed by the Federal Housing Administration. Where USDA loans have to be used for purchases in rural areas outside major cities, FHA loans can be used for purchasing in the heart of the city or in rural areas. When applying for an FHA loan, the lender will take your proof of income and past tax returns and determine how much you have coming in before tax