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.