An FHA home loan is a government initiative to get families with lower incomes, lessened down payment savings, or less-than-perfect credit scores into home ownership. If you're interested in an FHA home loan, keep reading for some answers to frequently asked questions.

What is the FHA?

The FHA stands for Federal Housing Administration. Alongside HUD (Department of Housing and Urban Development), they offered FHA Home Loans.

What are FHA Home Loans and How Can They Help?

The first distinction between an FHA home loan and a standard bank loan is that you're not borrowing money directly from the FHA. Instead, you're borrowing from a bank, but that loan is insured and supported by the FHA.

Because the FHA insures your mortgage, the qualification requirements are looser, making it easier to qualify. Also, you don't need a perfect credit score to qualify.

Do I Still Need a Down Payment?

Yes, but it's low. The minimum down payment requirement for an FHA home loan is 3 percent, which is significantly lower than the 10 to 20 percent required by most lending institutions.

If the FHA Insures My Loan, Do I Need Mortgage Insurance?

No, another advantage to an FHA mortgage is that because the FHA is insuring the loan, you don't need to pay for expensive private mortgage insurance (PMI). PMI is charged when a homeowner pays less than the standard 20 percent down payment on a house.

What are the Eligibility Requirements?

Typically, you need a social security number, lawful residency status in the U.S., and be at least 18 years old. The lender will then verify your income, liabilities, assets, and credit rating to ensure you are a good potential home purchaser.

FHA home loans don't typically have maximum income caps on them, but some income limits may be present on the down payment assistance programs, depending on your region and the size of your family.

Can I Get a Renovation Loan Too?

Yes, the FHA offers Home Loans for fixer-upper properties as well. Referred to as HUD's 203(K) program, this unique federal initiative allows you to purchase or refinance a property and include the cost of repairs and improvements into the value of the home. Of course, this initiative is only available to homeowners who plan to actually live in and occupy the home.

There are a number of good reasons you should ask your lender for an FHA Home Loan - it's easier to qualify, the down payment needed is low, it costs less and the FHA is committed to keeping you in your home, even through the hard times.

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