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National Housing Act

The National Housing Act was part of FDR’s New Deal. Find out more at

The National Housing Act was signed on June 27, 1934, by President Franklin D. Roosevelt to improve housing conditions, make housing and mortgages more accessible and affordable, and to reduce the foreclosure rate during the Great Depression. The law was part of the New Deal.

Deeper definition

The National Housing Act paved the way for the creation of the Federal Housing Authority (FHA) and the Federal Savings and Loan Insurance Corp. (FSLIC), which helped low-income families buy homes. The FSLIC insured mortgages, making it possible for federally chartered lenders to give out long-term loans.

The FHA helped revive mortgage lending and the construction industry by providing federal guarantees for loans made by building and loan associations, banks and other financial institutions. The loans stimulated the building of homes, farm buildings and small businesses and restored jobs in construction trades.

Another National Housing Act was passed in 1937 that empowered the FHA to clean up slum areas. The FHA made low-interest, 60-year loans to local governments so they could build apartment blocks, which were then rented to low-income families.

National Housing Act example

The stock market crashes of 1929 wiped out the assets of professional investors and regular citizens. Over half of U.S. banks failed, and mortgage defaults and unemployment skyrocketed. FDR instituted a number of federal programs, including the National Housing Act, to restore the economy. One of the industries hit hardest in the Great Depression was the construction business.

The National Housing Act helped revive lending and construction by guaranteeing loans. One low-income housing project made possible by that law and other New Deal programs was a development in Memphis, Tennessee. Built in 1938, it comprised 633 units and cost $3.4 million. The development has since been demolished.

Use Bankrate’s calculator to figure out how much house you can afford to buy.

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