One of the most popular products for a first-time homebuyer is the FHA Loan Program. The FHA loan has been around since the 1930s and still remains a popular mortgage product today. The FHA loan is administered by the Federal Housing Administration and is designed for low-to-moderate income buyers with minimum down payments. In fact, the FHA loan program only requires a 3.5% down payment.
However, to offset the lower down payment, FHA requires that borrowers pay an upfront mortgage insurance premium and a monthly mortgage insurance fee. A FHA loan may only be used to purchase or refinance a principal residence and must be owner occupied. Detached, semi-detached, townhouses, and approved condos are eligible for FHA financing. FHA does have loan limits established by county.