FHA Loan
Also known as Federal Housing Administration Loan
A government-insured mortgage with lower credit and down payment requirements than conventional loans.
In plain English
FHA loans are insured by the Federal Housing Administration, allowing down payments as low as 3.5% and more flexible credit requirements. In exchange, borrowers pay mortgage insurance (MIP) for some or all of the loan term.
FHA loans open the door to homeownership for many first-time buyers who can't yet put down 20% or have a shorter credit history, though MIP can be harder to remove than conventional PMI.
Where you'll run into it
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