The Federal Housing Administration, which backs a variety of home mortgages, reported Nov. 17 that it has shored up its finances. (Jonathan Ernst/Reuters)

The Federal Housing Administration is back in the black — though barely, according to an independent audit released Monday by the agency.

After the housing sector unraveled, the FHA played a pivotal role in propping it up by backing low-down-payment loans for home buyers when other lending sources dried up. Its share of the mortgage market soared, peaking in 2010, when it backed nearly 40 percent of all home loans.

But as the FHA’s popularity grew, so did its default rate. Rogue lenders migrated to the agency after the housing bust, bringing borrowers with unusually poor credit to the FHA from 2007 through early 2009. As those loans matured, many borrowers defaulted, slowly draining the cash reserves that the agency uses to cover unexpected losses.

For two years, those reserves have been below the level required by law. They became so low that the FHA had to tap $1.7 billion in taxpayer money last year to cover its losses for the first time in its history.

On Monday, the agency informed Congress that it has shored up its finances and won’t need to go to the taxpayers for more help. Housing officials said the FHA had about $40 billion on hand as of September, including $4.8 billion in cash reserves.

But it’s not out of the woods.

By law, the FHA must maintain a cash cushion that equals 2 percent of all the loans backed by the agency. The $4.8 billion cushion announced Monday equals just 0.41 percent, the agency said in its report to Congress, citing figures from its most recent audit.

The FHA has not hit the required 2 percent level since 2009, and the audit projects it won’t reach that target until 2016.

The agency does not make loans; it insures lenders against losses should the loans go bad. It is designed to use the fees it charges borrowers to cover those losses.

One of the key reasons its reserves remain so low is because the agency is losing money on its reverse-mortgage program, which allows seniors to withdraw equity from their homes. Another reason is that the FHA is not generating as much business as the auditors expected last time they examined the agency’s books. It backed $134 billion worth of new loans in the fiscal year ended Sept. 30, instead of the projected $191 billion.

The housing market’s unexpectedly slow recovery is eating into the agency’s share of the mortgage market, and so are the “annual premiums” that it charges borrowers. Those fees, which have been raised five times since 2010, have helped the agency beef up its cash reserves. But they have also become so expensive that they shut about 400,000 home buyers out of the market last year alone, the National Association of Realtors said.

David H. Stevens, chief executive of the Mortgage Bankers Association, said some of those borrowers are turning to loans backed by mortgage giants Fannie Mae and Freddie Mac because FHA fees are at an all-time high. “The FHA is ceding its share to Fannie and Freddie,” said Stevens, a former FHA commissioner. “It needs to find the right balance so it can stay financially healthy while meeting its mission.”

The FHA may be losing more customers soon. Fannie and Freddie have said they are planning to lower their down-payment requirement from 5 percent to 3.5 percent in the near future — a move that would make them even more competitive with the FHA, which backs loans with as little as 3 percent down.

“That’s going to further hurt FHA’s share,” said Mark Zandi, chief economist at Moody’s Analytics. “The FHA might even struggle with greater adverse selection, with better mortgage borrowers going to Fannie and Freddie while FHA gets stuck with more risky borrowers.”

While industry groups have asked the agency to lower the fees, housing officials remained mum Monday about that happening any time soon. Instead, they emphasized the improvements in FHA’s financial health. In a statement, Housing and Urban Development Secretary Julian Castro said that the fundamentals of FHA are strong. Not only is it back in the black, but its delinquency rate has dropped 14 percent since last year and the amount of money it has recovered on foreclosed homes is up 16 percent.