What is the primary function of the Federal Housing Administration?

The primary function of the Federal Housing Administration (FHA) is to ensure mortgage loans made by private lenders. This is critical because it helps to promote home ownership by protecting lenders against defaults from borrowers who might be considered higher risk. By providing this assurance, the FHA encourages lenders to offer loans to a broader range of borrowers, including those with lower credit scores or smaller down payments. This function ultimately supports the stability and growth of the housing market, making it possible for more individuals to access home financing and achieve their dream of homeownership.

In contrast, the other options do not align with the FHA's mission. The administration does not provide loans to small businesses, nor does it specifically offer home insurance or finance commercial real estate projects. Its focus is solely on enhancing the availability of mortgage loans to consumers through its insurance programs, which underscores the importance of its role in the residential real estate market.