What Is an FHA Loan?  An FHA loan is a mortgage insured by the Federal Housing Administration (FHA) — part of the U.S. Department of Housing and Urban Development (HUD). Because it’s government-backed, lenders can offer these loans with more flexible terms, lower down payments, and more forgiving credit requirements than most conventional mortgages.  FHA loans are especially popular among first-time homebuyers, borrowers with limited savings, those rebuilding credit, or those with limited or slightly blemished credit histories. They can