Logo of the Federal Housing Administration.
Logo of the Federal Housing Administration. (Photo credit: Wikipedia)

An FHA loan or mortgage is a popular choice, especially for first-time homebuyers.  It is called an FHA loan because the Federal Housing Authority backs it.  It’s a type of loan created by the government so that borrowers could get low-cost financing.

Another advantage of an FHA loan is that it is not as strict in terms of what’s required to qualify for one.  It also requires less of a down payment.  While most conventional loans required 20 percent down, the minimum down payment for one of these loans is 3.5 percent.  Plus, with a conventional loan if you can’t put down 20 percent, you will most likely be required to get what’s called private mortgage insurance or PMI.

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