An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment.

FHA's 203(b) loan program provides low-rate mortgages to buyers who make a down payment as small as 3 percent. The 3% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time home buyers.

The agency also operates loan plans for investors and purchasers of rural property. In addition to traditional first mortgages, the Federal Housing Administration offers a reverse mortgage program which helps seniors convert the equity in their homes to cash while retaining the titles to their homes.