What is FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help buyers with smaller down payments or less-than-perfect credit. It allows down payments as low as 3.5% with more flexible qualifying standards. In exchange, borrowers pay a mortgage insurance premium (MIP) built into the loan.
Example: A first-time buyer with a moderate credit score uses an FHA loan to buy a condo with just 3.5% down, qualifying more easily than they would for a conventional loan.