FHA loans were introduced in 1934 to help increase home ownership in the middle class during the great depression. Since then they have served as an excellent tool for middle and low income families to fulfill the American dream of owning a home.

FHA loans are insured by the HUD. Since the loans are insured by the government, lenders are often willing to give better rates for FHA. In fact interest rates for FHA loans are comparable to those of conventional loans.

FHA Loans for First-time Home Buyers

First-time home buyers are one of the biggest benefactors of FHA loans. Most first-time home owners find it difficult to come up with the 20% down payment requirement for conventional loans. Without the 20% down payment they are forced to go for private mortgage insurance which can be costly. FHA loans require a minimum down payment of 3.5% of the loan amount, which can even be gifted by a family member, employer or a non-profit organization. Read FHA loans for first-time home buyers to know more about the pros and cons of taking an fha loan while buying a house for the first time.