What is the purpose of FHA loans?

The purpose of FHA loans, offered by the Federal Housing Administration, is to provide affordable access to homeownership for individuals with lower credit scores or limited down payment savings. FHA loans facilitate the purchase or refinancing of homes by insuring mortgages issued by approved lenders. By doing so, the FHA reduces the risk for lenders, making it easier for borrowers to qualify and obtain favorable loan terms. These loans are popular amongst first-time homebuyers and those who may not qualify for conventional mortgages. The FHA loans typically offer lower down payment requirements, flexible underwriting criteria, and competitive interest rates. This program is designed to promote homeownership opportunities and stimulate the housing market by extending credit to a wider range of borrowers.