An FHA loan is a type of mortgage that is insured by the Federal Housing Administration (FHA), which is overseen by the U.S. Department of Housing and Urban Development (HUD) . The FHA does not lend money for a mortgage, but it guarantees the loan, making it easier for borrowers to get bank approval since the bank is not bearing the default risk. Here are some key features of FHA loans:

• Low down payments: FHA loans allow borrowers to make a down payment as low as 3.5% of the purchase price.

• Easy credit qualifying: FHA loans have looser financial requirements than conventional loans, making them a good option for borrowers with lower credit scores or who otherwise dont qualify for a conventional loan.

• Mortgage insurance: Borrowers who qualify for an FHA loan are required to purchase mortgage insurance, with the premium payments going to the FHA.

• Owner-occupancy requirement: FHA loans are geared towards new homeowners rather than real estate investors, so the house must be owner-occupied for at least a year.

FHA loans have historically allowed lower-income Americans to borrow money to purchase a home that they would not otherwise be able to afford. They are available to everyone, including those who can afford conventional mortgages, but borrowers with good credit and strong financials will be better off with a conventional mortgage, while those with poorer credit and more debt can benefit from an FHA loan.