What are some important things to know about FHA loans?

FHA loans are a government-backed mortgage option for people, particularly first-time home buyers, who cannot afford a conventional loan down payment. The Federal Housing Administration oversees FHA loans under the umbrella of the U.S. Department of Housing and Urban Development, according to the HUD website.

As of July 2015, a primary benefit of an FHA loan relative to conventional loans is a 3.5 percent minimum down payment requirement, according to HUD. FHA loans also offer lower closing costs and borrowing opportunities for people who cannot meet more rigid credit standards. FHA loans are available for singe-family properties as well as for dwellings with up to four units.