The FHA is the Federal Housing Administration, which is a federal organization in the United States Department of Housing and Urban Development (HUD) – if your loan is an FHA loan, it means it is insured by them. None of the funds are provided by the FHA; what the FHA does is make sure that the loan is taken care of in case the borrower doesn’t pay their loan. Available to all purchasers, FHA loan programs are created to help credit-worthy low-income and moderate-income families who do not have the qualifications for conventional loans.
The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans. Those with lower income or less starting money to put down on a mortgage are helped the most from FHA loan programs.