An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. This type of Loan allows First Time Buyers to afford a home by requiring only a 3.5% Down Payment. An FHA Loan also features lower interest rates than a Conventional Loan. This loan is ideal for First Time Home Buyers.