FHA loan
A mortgage insured by the Federal Housing Administration that allows a down payment as low as 3.5%.
Because the government insures the lender against loss, FHA loans can have easier credit rules and smaller down payments than many conventional loans. They are popular with first-time buyers.
FHA loans charge mortgage insurance premiums, which add to the cost. Compare the total cost with a conventional loan before you choose.
Example
On a $250,000 home, 3.5% down is $250,000 × 3.5% = $8,750.