FHA loans are mortgages insured by the Federal Housing Administration (FHA). Congress established the FHA in 1934 to help lower income borrowers obtain a mortgage that otherwise would have trouble qualifying. Because FHA loans are insured by the government, they have easier credit qualifying guidelines, as well as relatively low closing costs and down payment requirements. Your down payment can be as low as 3.5% of the purchase price. And closing costs can be bundled with the loan.