Final answer:
An FHA loan is popular with first-time home buyers due to lower down payment, flexible credit requirements, lower interest rates, and mortgage insurance.
Step-by-step explanation:
An FHA loan is popular with first-time home buyers because it offers several advantages:
- Lower down payment: FHA loans require a lower down payment compared to conventional loans. This makes it easier for first-time buyers who may not have a large amount of savings.
- Flexible credit requirements: FHA loans have more lenient credit requirements, making it easier for first-time buyers with limited credit history to qualify.
- Lower interest rates: FHA loans often have lower interest rates compared to conventional loans, helping first-time buyers save money over the life of the loan.
- Mortgage insurance: FHA loans require mortgage insurance, which protects the lender in case of default. However, it allows first-time buyers to qualify for a loan with a lower credit score or smaller down payment.