An FHA loan is a mortgage issued by an FHA-appointed lender and insured by the Federal Housing Administration. This loan is designed for low-to-moderate income borrowers. It includes a lower minimum down payment and lower minimum credit score than conventional loans.
With FHA loans, down payments can come from savings, a financial gift from a family member or a grant for down-payment assistance.
All these factors make FHA loans popular with first-time home buyers.