FHA Loans
Federal Housing Administration (FHA) loans are popular amongst first-time home buyers because it requires the least capital for a down payment. Typically FHA loans require the borrower to lay down only 3 to 4 percent for the down payment, which is lower than many conventional loans. The FHA does not fund the loans; rather, it insures the loans, and if the buyer defaults, the FHA insurance fund makes up the difference. Not just anybody can qualify for an FHA loan - a good credit record is necessary, along with proof of sufficient income.
FHA loans feature a variety of payment methods, the most common of them being the fixed rate loan. However, FHA loans also offer adjusted rate and graduated payment mortgages in order to aid those who have low or rising incomes. There is also a type of FHA loan that helps those who are in an apartment that is being converted into a condominium. Since the loan features a low amount of money down, and is also very flexible to meet the needs of a variety of situations, the FHA loan is among the most popular for people who are buying their first home.
For more information on mortgage terms related to the, see our partner's FHA loan glossary.
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