What is an "FHA loan"?

An FHA loan is a government-backed mortgage designed specifically to assist low-to-moderate income buyers in purchasing homes. This type of loan is insured by the Federal Housing Administration, which allows lenders to offer more favorable terms, such as lower down payments and more lenient credit score requirements. The goal of the FHA loan program is to make homeownership more accessible to a wider range of people, particularly first-time buyers who may struggle to meet the criteria of conventional loans.

The structure of an FHA loan encourages responsible borrowing and can lead to homeownership opportunities for individuals who might otherwise be excluded from the housing market. By providing this safety net for lenders through insurance, the FHA helps to stabilize the housing market and support economic growth.