FHA home loans enable potential borrowers who may not qualify for a conventional mortgage to buy a home, especially first time home buyers. The Federal Housing Administration (FHA) insures FHA loans against default, so banks are able to continuously issue loans without significant risk or capital requirements.
Even though the FHA does not issue the loans nor determine the interest rates on the loans, it does protect against default, providing lenders and borrowers the necessary reassurance. FHA loans are available for both single family and multifamily homes, and offer features such as low minimum down payments, reasonable credit expectations, and flexible income requirements.