FHA loans are mortgages insured by the Federal Housing Administration (FHA). Before FHA was established, it was only common for homeowners to put a 20% down payment when purchasing a home. FHA was established to help borrowers obtain a mortgage that otherwise would have trouble qualifying.
Benefits of a FHA Mortgage include:
- Require a down payment of 3.5%
- Gift funds for down payment are allowed
- Reduced mortgage insurance