FHA loans are an attractive option, especially for first-time homeowners because it is insured by the Federal Housing Administration (FHA). Primarily, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.Typically the borrower can be approved with 3.5% down vs 20% that is required on other loan programs. They also have some of the lowest interest rates available on the market. In many instances they are more than 1/2 point lower than conventional interest rates.
FHA loans also allow borrowers with less than stellar credit scores to get a home loan. Credit scores as low as 580 are approved in many cases. They have a higher interest rate associated with them but you can get into a home and start building equity.