Definition
Federal Housing Administration program enabling mortgages with down payments as low as 3.5%, serving first-time and lower-income buyers.
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FHA mortgages are designed for buyers unable to make large down payments. FHA loans require mortgage insurance protecting lender if borrower defaults. FHA has flexible credit requirements and income limits. FHA loans are popular among first-time buyers.
Pro Tip
FHA mortgages require upfront and annual mortgage insurance; calculate total cost of insurance.
Example
First-time buyer with 3.5% down payment ($15,000 on $425,000 home) using FHA financing.