FHA loan refers to mortgage loan which is insured by FHA (Federal Housing Administration). Essentially, it is the United States federal government which insures the loans for the approved FHA loans lenders so as to reduce their risk of losing the money advanced and interest there on if the borrower defaults in repaying the loan.
Typically, FHA loan is among the mortgage loans which are very easy to qualify for since low down payment is required. As the applicant, you need not have very good credit standing to qualify for this mortgage. There is requirement of FHA down payment of 3.5%. The borrowers who can’t afford the 20% traditional down payment or cannot qualify for private mortgage insurance should consider FHA loan.