The primary purpose of FHA loans is to provide lenders with added assurance against borrower default, thus encouraging them to offer mortgages with more favorable terms and lower down payment requirements. By insuring the loan, the FHA reduces the risk for lenders, making it easier for borrowers to qualify and obtain financing.
It’s important to note that FHA loans are only available through FHA-approved lenders. These loans can be used for the purchase or refinancing of a primary residence, and there are limits on the loan amount that vary by location.
Overall, FHA loans are a popular choice for individuals and families who may not qualify for conventional financing due to limited funds for a down payment or lower credit scores. They provide a viable option for achieving the dream of homeownership with more accessible requirements and assistance from the federal government.