FHA mortgages can provide 96.5% financing (3.5% down) often qualifying people with lower credit scores and less income than conventional mortgages.

The Federal Housing Administration (FHA) administers a program of loan insurance to expand homeownership opportunities. FHA provides mortgage insurance to FHA-approved lenders to protect these lenders against losses if the homeowner defaults on the loan.

The cost of the mortgage insurance is passed along to the homeowner. The standards for qualifying for these loans are generally more flexible than for conventional loans.

The FHA is part of the United States Department of Housing and Urban Development (HUD).